Just as ex-President Olusegun Obasanjo was criticized for selling oil assets/refineries in Nigeria, Emir Sanusi joins the league of industrialists urging Federal Government to sell some national/oil assets to private investors to alleviate the economic recession.
In his speech at the launch of the 2016 Banking Sector Report published by the Afrinvest West Africa Limited in Lagos on Wednesday, Sept. 21, the former CBN President suggested that one of the options available to government is capitalised on the sale of some refineries in a manner that will compromise its strategic interests. Sanusi said.
“One option is to sell down some oil assets, sell down some refineries, in a transparent manner that gives you value. You can also have options to buy them back later.”
He explained that such step would lead to increase in foreign exchange inflows into Nigeria’s economy.
“We have to get to a point when we welcome investors of all nationalities, who are willing to set up production plants here to turn our own raw materials into finished goods. Rwanda, Ethiopia have all done that very well.
“There is nothing we are saying that haven’t been done by other African countries. We need to go into an investment-driven model. China has grown into an investment-driven model. Nigeria needs to move into an investment-driven model.”
Emir Sanusi emphasised that any policy by the government which does not attract foreigners will not create jobs for its youths. He specifically affirmed his support for the CBN independent quote:
“I love the finance minister, but when the CBN said we are not reducing the interest rate, I said, ‘yes’. This, he explained was that the CBN should continue to protect its independence.
“I think it is a positive thing when the fiscal authorities and the many people in the private sector said they wanted a lower rate of interest rate. I was concerned that the CBN will succumb to pressure. And the fact that the CBN did not succumb to the pressure is a fact that it is beginning to claim its independence which is a very positive thing. And these are economic questions, you make choices. I can see why the CBN does not want to lower interest rate at this time.
“And the fact that the CBN did not succumb to the pressure is a fact that it is beginning to claim its independence which is a very positive thing. And these are economic questions, you make choices. I can see why the CBN does not want to lower interest rate at this time.”
The Emir explained that lowering the Monetary Policy Rate (MPR) at 100 or 200 basis points today, will not lead to rapid increase in credit growth that will reverse the downward trend in output. Rather, it would aggravate inflation and reduce the yield in fixed income. Hence he encouraged the CBN to allow for flexible exchange rate to work without interruption.
Analyzing the market value of the naira, the Banker continued,
“These things really require courage, because some of the decisions you will take, will seem to fly in your face in the first week or two. But look at the fundamentals. The naira today is undervalued. The fixed income is suffering high yields.
“The Lagos Stock market, if you look at the assets prices picking ratios, you got a gross undervaluation. If you allow people to come in and sell their dollars at market prices, people see they are going to make profits in the equities market and fixed income and also currency appreciation.
“So, long as you do not allow that, you will not have the float you want. Now, it is the inflow of the dollars into the economy that will take the naira towards its fair value and take it to where you want it to be not by fiat. The market does not accept orders. It will never happen, it has never happened.
“We need the CBN to take that risk, and courage to implement the flexible foreign exchange policy. Let the market work in the next two or three weeks and see, as people know they can come in, sell their dollars, buy stocks, sell their dollars, fixed income, make a profit in currency and capital acquisition, you are going to have gradually narrowing of the gap between the interbank and the parallel rate and have more liquidity in the market.”