In contrast to the apathetic attitude often seen among Nigerian public servants toward state-owned assets, citizens in China exhibit a strong sense of ownership over public enterprises due to a deep-seated patriotism reinforced by the country’s communist ideology. This ideological commitment has made government involvement in business highly successful in China. A prime example is the construction firm China Civil Engineering Construction Corporation (CCECC), which plays a central role in the nation’s infrastructure development projects across Africa, including road construction, railways, and ports in Nigeria.
On the other hand, in Nigeria, where there is a notable lack of patriotism, particularly within the public and civil service, government dominance in business has historically led to poor outcomes. This was the case until the government began to relax its control over businesses, starting with the unbundling efforts during General Ibrahim Babangida’s military regime.
During that period, industries such as broadcasting and banking were privatized, a trend that continued under President Olusegun Obasanjo’s civilian administration. Obasanjo further opened up sectors like ports and telecommunications to private investment, and more recently, the electricity sector has also been liberalized.
A common thread among these privatized entities and newly accessible sectors in Nigeria is that they have all become profitable, significant job creators, and contributors to GDP growth. Additionally, they have become more substantial sources of tax revenue following the government’s decision to allow private investment.
The situation highlights the risks associated with the prevailing belief in Nigeria that “government’s business is nobody’s business,” a notion deeply ingrained in the mindset of many Nigerians, especially public and civil servants. This attitude often leads to the reckless management of state-owned enterprises, which has resulted in their failure.
In contrast, businesses where the government holds only a minority stake have generally thrived. For example, the Nigerian Liquefied Natural Gas (NLNG) company, which operates in partnership with international oil companies (IOCs), has been a significant revenue source for the NNPC.
To address the challenges of government-owned businesses, it is crucial to move away from the mindset that government assets are inherently neglected. This attitude underlies issues such as corruption and the mismanagement of public utilities, and government-run businesses such as banking services when the likes of UBA, FirstBank and Union Bank, electricity provider, NEPA, telecommunications company, NITEL, and the airline, Nigeria Airways, were under the control of the government.
Following the unbundling of the aforementioned assets to private investors, they have become profitable not only to the investors but they are also creating employment and paying taxes to the government.
Despite NNPC’s transformation into NNPCL and its shift towards a market-driven approach, it still operates with bureaucratic constraints typical of government agencies. Rather than pursuing a full sale of the refineries, NNPCL is opting for a concession strategy, inviting private sector bids for the management of the Warri and Kaduna refineries.
Given the problematic history of corruption, such as the crude oil-for-refined products swap scandal under former Minister Diezani Alison-Madueke, it is concerning that NNPCL is not opting for a complete sale to private investors with the necessary expertise and funding. This cautious approach seems to ignore the lessons from previous failures in managing government assets.
Fortunately, the Petroleum Products Importers Association has expressed interest in pooling resources to acquire one of the refineries. This initiative should be encouraged. Private sector operators are likely to use the refinery more effectively compared to leasing it to an operator who might exploit the system, as seen with the mismanagement of tollgates on highways.
Selling the refineries or their controlling shares outright to new buyers could also enable Nigerian retail stations to expand into neighboring countries and address the problem of petroleum product smuggling across our borders. The example of OVH’s purchase and sale by NNPCL Retail, and its subsequent merger, demonstrates the potential for Nigerian buyers to extend the franchise to neighboring countries, similar to how Citgo, a Venezuelan brand, once operated in the U.S.
Smuggling may persist due to the lack of a formal framework for selling petrol across borders. The type of innovative approach required for this expansion is best handled by private sector investors. Therefore, President Bola Tinubu should consider transitioning from the proposed concession of the Warri and Kaduna refineries to a full sale to experienced entrepreneurs.
Over the past fifteen months, President Tinubu has revised several policy initiatives he deemed suboptimal. Concessioning the refineries is less effective than a complete sale, and reversing this decision would likely earn him a commendation from industry stakeholders and the public. Given Mr. President’s responsiveness to Nigerians’ needs such as increasing the amount paid to the poor through conditional cash transfer and returning some of the subsidy on petrol pump prices, there is hope that he will take the necessary steps to stop NNPC Ltd from engaging in this latest gambit which spells doom for the oil behemoth that is supposed to be our country’s cash cow but still punching below its weight. As Oliver Goldsmith wisely said, “Hope is not a bait; it covers any hook.”