Nigeria has accumulated a large amount of dead assets, estimated at N180 trillion, but the country is dragging its feet to free them despite mounting public debt.
Dead assets generate no income and do not increase productivity or wealth. In his book The Mystery of Capital, Spanish explorer and conquistador Hernando de Soto explains that dead capital holds great economic growth potential for countries facing economic challenges. I am doing it.
PwC estimates that Nigeria has N180 trillion, or $900 billion, of assets locked up, mostly in real estate. Freeing up capital could be a game-changer for the cash-strapped country, whose debt-to-revenue ratio stands at 74% in the first quarter of 2024 (Q1).
According to data from the Debt Management Office (DMO), Nigeria’s public debt has increased from N12.6 trillion in 2015 to N121.7 trillion in 2024.
On the other hand, the country still has a huge amount of unused assets, including abandoned government assets, dormant state-owned enterprises, and unused land.
Mr. Chudi Ubosi, principal partner of Ubosi Ele+ Company, said the country has over 300 properties around the world, many of which are abandoned, underutilized and in various stages of construction. He pointed out that several thousand kilometers of road projects have also been abandoned across the country.
Also read: Nigeria intensifies bid to unlock N180 trillion of dead assets
Efforts to unlock assets don’t work
Over the years, the Nigerian government has launched various initiatives aimed at converting these dead assets into productive resources. One such initiative was the President’s Initiative on Infrastructure, which aimed to lease abandoned government assets to private investors. However, it did not work due to system issues.
“One of the main reasons Nigeria is struggling to recover dead assets is bureaucracy,” said Ayobami Ishola, a financial expert at a leading international research firm based in the United States.
Ishola cited lengthy approval processes, inconsistent government policies and lack of coordination among government agencies as some of the bottlenecks hindering the country’s progress in efforts to rehabilitate dead assets.
A report by the Nigeria Economic Summit Group (NESG) shows that more than 80 per cent of government-owned properties in Abuja and Lagos remain vacant, yet transfers of ownership and use rights still require a red tape to be passed through. He emphasized that there is.
Corruption also plays a significant role in slowing efforts to convert dead assets to productive uses. There are documented cases of public officials exploiting legal loopholes to maintain control of these assets, reducing transparency and accountability.
The Independent Corrupt Practices Commission (ICPC) reported that up to 25 percent of identified deceased assets are embroiled in corruption-related disputes, preventing their productive use.
The impact of this failure is clear. Nigeria’s annual debt servicing costs have risen to more than $10 billion, accounting for more than 70% of government revenue.
This unproductive use of assets means lost opportunities for job creation, housing creation to fill the nation’s estimated 28 million housing gap, economic growth, and infrastructure development.
NIOMCO’s Ajaokuta steel plant is almost at a standstill.
Established in 1979, the Ajaokuta Steel Plant (ASP), estimated to be worth more than $8 billion, is one of many assets owned by Nigerians and reached 98% completion as of 1994. However, it remains dormant and is a huge economic waste. .
ASP has a huge structure with a 68 km road network and 24 residential complexes. Some of the estates have more than 1,000 homes, a port, and a 110-megawatt power plant.
Ajaokuta alone has 43 separate factories. It is estimated that Ajaokuta will create at least 500,000 jobs when it becomes operational after 45 years of nearing completion.
The Central Bank of Nigeria (CBN) reported that Nigeria currently imports approximately 25 tonnes of steel, aluminum products and related derivatives annually, valued at an estimated $4.5 billion.
“Ajaokuta is Nigeria and probably Africa’s biggest failure. It can be used to build turnkey functional steel plants,” US-based financial expert Kalu Ajah said in a post on X (formerly Twitter).
“The government should withdraw from Ajaokuta, sell the site and allow private sector capital and expertise to rebuild and take ownership,” he added.
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N40 billion Federal Secretariat Complex, Ikoyi
Built in 1976 for the Federal Civil Service in Ikoyi, Lagos, the 12-storey Federal Secretariat has been abandoned since the federal capital was moved from Lagos to Abuja in 1991 by then Military President Ibrahim Babangida. was.
The large secretariat complex was one of many federal government properties sold to private buyers by the Olusegun Obasanjo administration between 2002 and 2006, but the complex was riddled with bureaucratic red tape and It has not yet been used for vested interests.
The property surveyor and valuer who carried out the valuation work on the complex revealed to Business Day that the value of its assets, including land and physical structures, is approximately N40 billion, adding that if the assets existed He added that it could have been even higher. It is especially used in prime locations.
Marianne Udo Okonjo, CEO of Fine and Country International, said she would like to see the complex and other dilapidated national monuments replaced, as is being done in other countries around the world. I hope to convert it to other uses.
He cited Britain’s St Pancreas Renaissance Hotel, which sat abandoned for 69 years before being transformed into a five-star hotel in 2011.
More than $25 billion spent on renovating NNPC refineries
Nigeria has four aging state-run refineries with a combined production capacity of 4.45 million barrels per day. The Kaduna plant in the north has a capacity of 110,000 barrels, and there are three facilities in the oil-rich Niger Delta, including the 125,000 barrel Warri refinery.
But these refineries, despite spending more than $25 billion to rehabilitate them, produce little gasoline, leaving Nigeria dependent on fuel imports despite being Africa’s largest oil producer. is worsening.
Hopes for gasoline production have become a reality as the Nigerian National Petroleum Corporation (NNPC) has begun a $1.5 billion upgrade of its Port Harcourt refinery. But to this day, the story remains the same. Operation has not started yet.
Analysts have suggested privatization or public-private partnerships as a way to revive the moribund refinery to boost the economy, reduce foreign exchange leaks and create job opportunities.
Fola Ajayi, a Lagos-based energy expert, said: “Instead of selling the refinery to private investors, we should just address the problems of corruption and inefficiency that have historically plagued the multi-billion project. So what do you think?” he said.
Tinapa: Nigeria’s $450 million business and leisure resort in the shadows
Located in oil-rich Cross River State, Tinapa is home to futuristic movie studios, luxury shops, elevated light railways, and free trade zones, which should be a real source of income for tourism enthusiasts and earn hundreds of thousands of dollars. It is expected to become a commercial hub in West Africa, attracting thousands of people. dollar.
But 10 years after opening, the 80,000 square meter (861,000 square foot) warehouse and store, which cost an estimated $450 million (413 million euros) to build in the Niger Delta, has become a ghost town. It has become a symbol of the monument. waste.
The facility, which opened in 2007, was aimed at attracting wealthy Nigerians who normally shop in Dubai or London and turning the Cross River into a commercial crossroads on the Atlantic coast, but for its backers it has become a financial black hole. It becomes.
“Everyone was so excited at the time. Tinapa was going to drive economic development for the entire region and create thousands of jobs,” project director Bassey Ndem was quoted as saying.
He added: “Everything was going well at first. At its peak in 2009, it generated $30 million in revenue. But it faced stiff resistance from customs. They really wanted the duty-free zone to work. I didn’t want that.”
Economist and policy expert Nonso Obikili said Tinapa’s downfall was mainly due to the lack of existing infrastructure to transport goods, such as bad roads and an average-sized port.
“This was a far-reaching project conceived along with a deep-sea port and was supposed to enable larger ships to come to Calabar,” he said.
