The Federal Government has been urged to sell off some of its assets especially in the oil and gas, aviation, among others, to raise cash for some key projects or go into Public Private Partnership.
Ike Chioke, group managing director/CEO, Afrinvest West Africa limited, who gave this advise also said what the governments needs to do if it needs cash for some key projects is to prioritize the projects that make a lot of sense especially as is contained in the Economic Recovery and Growth Plan.
“In Nigeria, we have a lot of assets that instead of yielding money, is costing us a lot of money. Government can sell down part of its joint-venture positions in oil and gas sector may be, from 60 per cent to 40 per cent it can achieve some cash. That way, the onus will be on the international companies to be more transparent. It means that you can no longer use those companies as slushy funds for government’s backdoor business. You force the companies to list on the Nigerian Stock Exchange and build up the capital market,” Chioke said while speaking with journalists in Lagos.
On the banking side, he said the depreciation in currency affected all the banks. According to him, There are some banks that have depressed capital adequacy ratio and are looking for ways to boost their capital. But on the flipside, some of the tier one banks that have more foreign currency deposits that are risk assets, benefited from the devaluation.
“So, what we see is a continued widening of the gulf between the tier-1 and the tier-2 banks. Once upon a time, tier-one banks accounted for about 60 to 65 per cent of the market share of the banking sector. In the universe of 14 banks we covered in this report, we have seen that percentage rise to over 70 per cent,” Chioke added.
Speaking further, he said, “the tier-1 banks continue to grow, often at the expense of the tier-2 banks. You might also recall that some of the members of the Monetary Policy Committee of the Central Bank have observed that some of the tier-2 banks might be challenged.
While one may say that the system itself is sound, but if we have multiple tier-2 banks that are challenged, and if all of them were to go down at the same time, you could have a pack of a systemically important bank. The fact that we had foreign exchange illiquidity in 2015 which became massive in 2016 constrained growth across all industries particularly in the manufacturing sector. But it supported and spurred growth in agriculture and more investment, because for the first time in recent years, we had pricing parity. The cost of production in Nigeria did not make our goods too expensive. So, we had a lot of people invest in agriculture”.