You see, at times having so many underutilised assets may not be wise, especially when in debt.
Nigeria may be able to reduce her debts by selling off some properties or assets that are underutilised.
The Lagos Chamber of Commerce and Industry (LCCI) has urged the Nigerian government to explore other avenues in the management of its debt, including the sale of underutilised assets.
The President of LCCI, Gabriel Idahosa, said this in the first quarter of 2024, to address the state of the economy.
Idahosa made recommendations to the government on policy alternatives that can better empower the private sector to drive growth.
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He gave these recommendations in a quest for a stronger economy and better-enabling business environment.
“There are a lot of assets that are either underutilised or not utilised at all which can generate cash and reduce the amount of borrowing,” Idahosa said.
“If we’re spending 80% of revenue just to service debts, then you wonder what’s left.”
Nigeria’s public debt profile would have risen to at least ₦95.2 trillion as of the end of December 2023.
The Debt Management Office puts Nigeria’s public debt at ₦87.91 trillion as of the end of September 2023.
With the approval of the National Assembly for the securitisation of the outstanding debit balance of ₦7.3 trillion owed by the Federal Government to the CBN, its inclusion has put the country’s public debt stock to at least ₦95.2 trillion.
Idahosa said Nigeria’s high debt service-to-revenue ratio of 73.5% makes its debt situation unsustainable and growing fiscal concern.
He explained that Nigeria’s debt service-to-revenue ratio is higher than Kenya’s debt service-to-revenue ratio of 64.3%
While Egypt’s ratio of 20.5%, and South Africa’s ratio of 20-25% is much lower.
“The chamber is concerned about the surge in the country’s debt profile.
Sell Off Assets That Are Underutilised For Cash To Pay Off Debts
“Nigeria needs to start looking at selling off assets that are just sitting down there adding no value to the revenue generation of the country.
“We hope that government will begin to address this situation in our fiscal public finance space by converting assets grossly underutilised into cash that we need to reduce the debt level that is constantly rising,” Idahosa said.
The Director-General of LCCI, Chineyere Almona, said the government owns a lot of assets, and there’s a need to optimise these assets.
“A lot of time, we talk about what the government owes, but we rarely talk about what the government owns,” she said.
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Idahosa also spoke on diversifying into the solid minerals sector to reduce Nigeria’s dependency on oil revenues.
He said the development of the solid minerals sector was likely to create job opportunities across various stages of exploration, mining, processing, and marketing.
Also, it can contribute significantly to reducing unemployment rates and fostering economic growth.
However, the successful implementation of the policy may face various challenges, including regulatory hurdles, lack of infrastructure, and bureaucratic inefficiencies.
“Unregulated mining activities, even with a policy in place, may pose environmental risks such as deforestation, soil erosion, and water pollution,” Idahosa said.
He added: “The sector may also be susceptible to revenue leakages due to corruption, illegal mining practices, and inadequate monitoring mechanisms which could undermine the government’s efforts to maximise revenue from the solid minerals sector”.
