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•Reiterates commitment to grow Nigeria’s assets to N100trn
By Chinwendu Obienyi and Chukwuma Umeorah
The Federal Government on Tuesday, stated that it intends to place more emphasis on domestic resource mobilisation as a more cost-effective strategy rather than relying on external borrowing.
This was even as it expressed confidence that it will grow the country’s asset under management (AUM) to a minimum N100 trillion from N18 trillion over the next 10 years to boost economic impact on Nigerians.
The Minister of Finance and Coordinating Minister of the Economy of Nigeria, Wale Edun, disclosed this during the launch of Afrinvest’s 2023 Nigerian Banking Sector Report themed; “Getting Nigeria to work again” in Lagos.
Expressing concerns over reliance on the debt-to-GDP ratio for decision making, Edun who was represented by the Managing Director/Chief Executive Officer, the Ministry of Finance Incorporated, (MOFI), the special purpose investment vehicle and asset custodian agency of the Federal Government, Dr Armstrong Takang, said that the idea of debt against GDP is somewhat unrealistic because it gives a false sense of confidence and acknowledged that despite pumping in a lot of money into the economy, the government is yet to see the kind of growth it expects owing to a number of factors like inflation, the Russia-Ukraine crisis and FX illiquidity.
According to him, the FG is looking at ways to aggressively reduce dependence on imported wheat and substitute Premium Motor Spirit (PMS) with Compressed Natural Gas (CNG) to promote local production and reduce costs respectively.
He noted that to get the Nigerian economy working again, there is a need to focus on domestic resource mobilisation, reforms and strategic initiatives in various sectors. Listing the initiatives, the Minister said that utilising forward sale transactions and exploring the use of assets will unlock liquidity and attract financial capital flows.
While stressing that it is much more expensive to raise capital abroad, Edun noted that this was mainly the reason the FG reformed MOFI to unlock resources lying dormant as it intends to optimise corporate assets, real estate, oil and gas to generate revenue.
“We have a plethora of resources across different asset classes that have been lying moribund for years. Many of our corporate assets have not been paying dividends. We have significant real estate assets at home and abroad that are not yielding any revenue for us. Utility value is very low, that must change. We have oil and gas assets that have been performing sub optimally for decades. Licences were given to people over 10 years ago, they have not invested a single dime in developing those assets.
Whereas you have other investors that are looking to invest in those assets. We need to go back and determine how best to sweat those assets to optimise those assets to deliver value for us. It would be cheaper for us to do that than to rely on external borrowing”, he explained.
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