The Nigerian Federal Government is reportedly exploring the possibility of selling stakes in around 20 state-run companies as part of efforts to raise funds and enhance governance in these entities. Among the firms under consideration for stake sale is the Nigerian National Petroleum Corporation (NNPC). The Ministry of Finance Incorporated is contemplating various options, including strategic sales and initial public offerings (IPOs), with the goal of implementing the plan within the next 18 months.
According to Armstrong Takang, CEO at the Ministry of Finance Incorporated, some of these state-owned entities require private sector involvement to assume controlling shares. The emphasis is on creating value rather than retaining control, with the government considering scenarios where it owns 49% of well-performing entities rather than 90% of underperforming ones.
The move aligns with President Bola Tinubu’s broader economic reform plan for the country. The government is in the process of appointing consultants, including valuers, financial advisors, lawyers, and bankers, to handle various aspects of the stake sale transactions.
This potential sell-off comes after previous discussions dating back to 2016 about the government selling national assets to bolster its revenue. In October 2022, sources indicated that the government was considering selling or concessioning approximately 27 national assets, including landmarks and power projects.
Opinion:
The Nigerian government’s consideration of selling stakes in state-owned companies reflects a strategic approach to both fund-raising and improving the performance of underperforming entities. This move aligns with global trends where governments are opting to leverage private sector expertise and investment to enhance efficiency and governance. The emphasis on value creation over control retention is an important mindset shift, highlighting a focus on outcomes rather than mere ownership percentages. However, successful execution will require careful planning, transparency, and ensuring that the interests of both the public and private sectors are balanced for optimal results.
Punch