THE ailing financial system of Nigeria has been a source of concern to government and the people of the country.
To this end, a two-day National Finance seminar was recently organised in Akure, Ondo State by Times Leisure Services in conjunction with the Bank of Credit and Commerce International (BCC1).
The first plenary session was supposed to have been chaired by the secretary to government, Chief Olu Falae who was inadvertently absent and thus his chair was occupied by Chief Asabia.
The first paper of the seminar was presented by Mr. Ahmed Kaza, the managing director of the Bank of Credit and Commerce International.
The paper titled: “The Role of Financial Institution in Privatisation and commercialisation” identified what financial institution could do to foster the effective implementation of privatisation and commercialisation.
Privatisation Mr. Raza said is one of the four concrete policy measures embodied in the Structural Adjustment Programme (SAP) the others being the SFEM now FFM debt rescheduling and a new tariff structure. But the seminar added the fifth, deregulation and trade liberalisation.
Mr. Raza argued that so far, the only major component of SAP or which not much ha; been accomplished to date is privatisation, He argued further that ai present privatisation I still a concept yet to be fully developed ant understood.
Having defined privatisation, Mr. Raza’s paper explore the concept in the world trend where even the social countries are making moves to privatise public enterprises. H adduced the now fam liar reasons why government should divest ii holdings in enterprises.
He identified six functions financial institution should carry out to ensure a successful privatisation.
These according to him include, financial intermediation, putting the financial houses of companies to be sold in order, valuation and pricing of shares of enterprises to be privatised, allotment of shares, marketing shares and granting of loans to individuals to purchase shares.
Mr. Raza argued that there were socio-political problems to overcome before a successful privatisation exercise can be embarked upon. Such impediment in his assessment include the relatively underdeveloped and fragile money and capital market in the country, the non-conducive atmosphere to private sector participation in the economy, the underdeveloped infrastructural facilities in the country, political opposition among others. He ended his paper by urging Nigerians to be more accommodating to foreign equity investment.
The second paper was titled the “Rationale for Privatisation and Commercialisation was presented during the second plenary session by Mr. F.K. Bajomo the executive director of Union Bank who stood in for the bank’s chief executive.
The session was chaired by Mr. Ajibola Ogunsola, chief executive of Ajibola Ogunsolaa & Co.
In the paper presented by the Union Bank executive director argument is not actually a new economic thinking or phenomenon. In fact, more than a century ago, the classical economists had argued strongly in favour of private ownership of the nation’s economic resources and factors of production.
For instance, Adam Smith advocated for privatisation as a means of eliminating waste and maximising the value of assets.
Quoting from the Wealth of Nations, the famous economic bible of Adam Smith, Mr. Bajomo pointed out that people are more prodigal with the wealth of others than with their own, hence, public administration is negligent and wasteful, since bureaucrats and others public employees have no direct and personal interest or commitment, as such to the commercial outcome of their actions on inactions.
Smith for instance, argued that public lands should be privatised as their productivity was only 25 per cent of private land.
Going further, Mr. Bajomo argued that privatisation is a global exercise involving almost all countries of the world including the USSR
Mr. Bajomo made five suggestions which could help to address privatisation, the recommendation include a proposal t amend the NEPB act, if debt equity is to be used as part of privatisation strategy, it must be carefully and thoroughly studied to ensure that the gains already made from NEPB are not lose, essential and strategic industries should not be privatised, industries in which the private sector is best suited should be privatised and the implementation of the privatised programme should be gradual.
On the second day if the seminar, the third plenary session vas held. Otunba S. Balogun the executive ii air man of First City Merchant Bank president as chairman.
On the second day if the seminar, the third plenary session vas held. Otunba S. Balogun the executive ii air man of First City Merchant Bank president as chairman.
The speaker at this session was Dr. (Mrs.) Toyin Phillips, an assistant director (Research with the Central Bank-In a well research paper, Dr. Toyin Phil lips considered Debt-Equity swap and privatisation the prospect debt burden reduced Dr. Phillips went in the economic realms ‘ debt burden, debt inversion and privatisation Dr. Phillips then ent into die benefits implications of debt equity swaps. Dr. Phillips argued lat the debt equity grape will help to reduce Nigeria debt burden, improvement in source allocation, stimulation of die privatisation exercise and he promotion of a congenial investment environment.
On the negative side, she argued that debt-equity swap could destabilise the domestic economic policies because the purchase of such external debt has to been done through monetary authorities of the debtor country; she said, is likely to cause excessive growth in monetary aggregate.
However enumerated the costs and benefit of debt-equity swap Dr. (Mrs.) Phillips went ahead to explore the phenomenon world wide. She proposed the setting up of a foreign investment committee, the timing and redemption ceiling of shares in the privatisation exercise, the effective monitoring of exchange rates movement so that FEM rate would make debt con version attractive.
Dr. Philips stressed that the pace of export promotion must be accelerated through fiscal measures and other incentives to promote production for exports. Details guidelines, she said, are necessary to translate the proposed export free zones into reality.
Continuing her argument, she said that Nig-ans must step up its old financial initiative sustain the on-going economic reforms as ‘ell as the political will a make the reforms work.
At the end of her paper, she was well applauded after which the seminar broke for launch.
During the after-loon session, the 4th denary session of the seminar, Chief Femi Ajayi, the executive chairman of Financial Merchant Bank, Financial Trust Brokers, Financial Assurance and The Republic Newspaper was the chairman. At the mention of his financial empire during the introduction by Tunde Savage, participants rent the air with “capitalist.”
The guest speaker for die afternoon session was Mr. O. J. Adewumi chief executive of ABACUS Merchant Bank who presented a paper on Nigerian companies. The paper after exploring all the legal business environment in Nigeria, prospect for equity swap within the legal framework concluded that debt equity swap and debt conversion is one of the viable options available to relieve the country from the debt problems.
Mr.. Adewumi expressed the fear that the exchange of debt instrument for equity in Nigeria companies would lead to a distortion in the ownership structure of Nigeria enterprises. The Nigerian Enterprises Promotion Act, 1977 which stipulates the level of minimum participation in the companies where there is foreign interests will need to be reviewed.
In his opinion, debt equity swap if realised rill influence the success or failure of privatisation and commercialisation programmes.
Mr. Adewunmi said that efforts to encourage the inflow of foreign investment to augment domestic investable funds for capital project development most continue.
At the end of the presentation, the seminar went into a division to discuss the papers and prepare grounds for the final communique.
The 5th plenary session featured D.I. Faton O who occupied the chairman seat in place of Alhaji Muktar Ahmed ICON MD who was unavoidably ‘absent.
The speaker was Chief Akin George.
Chief Akin George presented a paper on Geographic spread of ownership of privatised enterprises: Achieving Equity through capital market operators.
In the paper, Chief Akin George made out a case for privatisation, the problems likely to be encountered, the benefit accruable from privatisation and the possible opposition to its implementation, the possible concentration of wealth in the hands of a few.
He suggested as solution to the problem, the geographical spread of ownership of privativated enterprises. He said that there must be adequate funding; de liberate effort to shares; orderly reverse of shares to that market enlightenment campaigns all over the country to educate the masses on the exercise and an appropriate mix of shares.
Chief Akin George concluded by suggesting that at the end of privatisation exercise, i it ever takes place, gov eminent should publish a detailed report of th exercise showing the amount of shares offered for sale and what bought what.
The six plenary session was the last for the seminar and chaired by Alhaji S.A.O. Sule the managing director of Nigeria Arab Bank in which Alhaji S.D. Umar, managing director of Continental Merchant Bank presented a paper titled: Strategic for successful privatisation.”
In his presentation Alhaji Umar argued for phased implementation of the programme and increment in investable funds.
