By Chinwendu Obienyi

For several years, the cloak of “economic diversification” characterised attempts to reverse Nigeria’s over-dependence on oil with little  progress. This is because despite numerous reforms, international loans and restructuring programmes, 133 million Nigerians still battle multi-dimensional poverty. It is no secret that the global economy is undergoing tectonic structural changes that is currently affecting demand for Nigeria’s oil, leaving an oil-dependent economy more vulnerable.

Although there have been improvements in global fuel efficiency, the absence of electricity as a substitute for oil in the transport sector and the falling prices of renewables and storage technologies all led to a reduction in demand for fossil fuels. Reacting to this, economic experts have suggested that apart from several initiatives taken by the government, there needs to be a deeper search to enhance and revitalize the economy.

They also noted that the constant borrowing from the International Monetary Fund (IMF) and World Bank (WB), Afreximbank amongst others have left the country in enormous debt and shambles.

Responding to these calls, the Federal Government under the former President of Nigeria, Muhammadu Buhari, set up plans to place more emphasis on domestic resource mobilization as a more cost-effective strategy rather than relying on external borrowing via the reintroduction of its Ministry of Finance Incorporated (MOFI).

According to Buhari, this was part of overall measures to revive, restructure non-performing assets and boost government revenue. Appointing Takang Armstrong as the Chief Executive Officer, MOFI, Buhari charged the governing council and board of directors to among other things prioritize government investments to derive highest returns from the current estimated N18 trillion to N100 trillion in 10 years.

In a swift move, the MOFI team approached Nigerian Exchange Limited (NGX), FMDQ as part of its strategic plan towards deepening partnerships. Armstrong said the Ministry, over the  its inception 64 years ago, has played a passive custodian role, functioning mostly as a registry of Federal Government’s investments and assets.

He noted that over this time, MOFI was not structured with the right governance or resources required for it to deliver on its mandate and stated that there is a clear need to unlock the value of Nigeria’s public wealth by establishing an institution that focuses on optimizing the value of the FG’s investments and assets.  He also added that MOFI will partner with the NGX and FMDQ to identify those entities that can be put on a path to listing. This process, he said, will enable the companies to commence the process of meeting those governance, operating and reporting requirements that would qualify them for a listing.

While representing the Ministry of Finance and Coordinating Minister of the Economy, Wale Edun, at a recent forum, Armstrong also revealed that the government was 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.

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He said it was much more expensive to raise capital abroad, hence the need to reform MOFI to unlock resources lying dormant and optimising 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.

Responding to this, Professor Ken Ife, a lead consultant on private sector development to the ECOWAS Commission, noted that MOFI would be a game-changer in bringing dormant assets to the frontiers of best international practices in modern management of sovereign assets.

Prof Ife, while speaking during a programme monitored by Daily Sun, said that the agency is bringing higher visibility to federal assets.

“Some of the viable assets stands at N18 trillion and then when you begin to rejig the likes of NNPC and some of them and take them to the capital market, then you get a transformational approach to the whole thing.

For example, Saudi Arabia needed $25 billion and did not borrow from World Bank, they however looked at the value of the Aramco oil company and sold 5 per cent of it and two years after that the value of the oil company went up to $2.3 trillion and so that is the kind of dynamics you are going to see. Secondly, MOFI will improve the liquidity of existing assets and sweat the dormant assets and bring them to contribute to the liquidity.

Ife, who is also a member of MOFI’s governing council, lamented about the high borrowing cost, said that 79 per cent of the current revenue flow from FX comes from crude oil while adding that by floating LNGs or CNGs, Nigeria has unthinkable revenue coming from that space.

“Looking at the current revenue flow from FX, 79 per cent of it is coming from crude and so is 11 per cent coming from gas. Hence, 90 per cent of existing revenue flow from FX is coming from oil and gas. But there are proposals to bring in floating LNGs which will rapidly within 3-6 months generate unthinkable revenue”, he said.

Experts note that revitalising Nigeria’s economy through dormant assets requires a comprehensive and coordinated effort from the Tinubu-led administration, private sector, and civil society. By unlocking the potential of these assets, Nigeria can stimulate economic growth, create jobs, and improve the overall well-being of its citizens.