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FG wasted N1.6tn on 600 public enterprises – BPE

By BusinessNews Staff on June 4, 2014

The Federal Government on Monday said its investment of N1.6tn over the years in 600 public enterprises was a drain on the public treasury.

The Director-General, Bureau of Enterprises, Mr. Benjamin Dikki, said this while speaking to members of a gold club.

A statement made available to our correspondent on Monday by the bureau’s Head of Public Communication, Mr. Chigbo Anichebe, quoted the BPE boss as saying there were no corresponding returns on the investments as the enterprises remained a drain pipe.

Dikki, in a presentation titled, ‘The Nigerian reforms and privatisation policy, processes, gains, challenges and prospects’, said only 500,000 jobs were created in the process even as the enterprises had over 5,000 board seats.

He said a substantial part of the non-performing debts Nigeria owed the London and Paris Clubs were mostly loans to the public enterprises, which also owed salaries and left huge pension liabilities amounting to over N2tn borne by the Federal Government.

He said, “Public enterprises consumed over $3bn (about N480bn) annually in subventions and subsidies. Tax deductions at source were not remitted to the tax authorities and no dividend was received; neither was reasonable service provided by them, despite their monopoly status.

“Nigeria’s economy experienced declining growth, increasing unemployment, galloping inflation, high incidence of poverty, worsening balance of payments, debilitating debt burden and increasing unsustainable fiscal deficits.”

Dikki noted that the twin policies of government direct investment in the Nigerian economy and an attempt to indigenise the economy did not produce the desired economic results as the enterprises could hardly break even and even became a huge burden on the government budget.

Dikki said that the Federal Government had commissioned several studies from 1969 to 1984, whose findings revealed that the public enterprises were inefficient, corrupt and heavily dependent on public treasury.

He added that the reports also showed that the investigated public enterprises had defective capital structure and suffered incessant political interference.

He said the setting up of the Technical Committee on Commercialisation and Privatisation in 1988, which later metamorphosed into the BPE, was to free government from businesses and bring in private hands.

Dikki listed the gains of privatisation as the utilisation of proceeds for other socio-economic objectives, non-allocation from the treasury to privatised enterprises, payment of corporate tax and heavy investments by the new owners that grew the companies and the economy.

On the power sector reform, he said that an estimated 90 million Nigerians were living without access to electricity, thus justifying the need to privatise the power sector to increase the reach.

Dikki added that the reforms carried out in the telecoms, pensions, debt management and other sectors were impacting positively on the Nigerian economy even as he said that the BPE had lined up several reforms in the years ahead.

[Punch]

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