By Toye Olori
LAGOS, Jan 6 1998 (IPS)

Nigeria’s 1998 economic blueprint has been greeted with mixed feelings, especially from manufacturers who have urged the government to exercise caution in it plans to privatise petroleum refining companies.

The 1998 budget, which includes measures to stimulate production in this West African nation, was unveiled by General Sani Abacha on Sunday evening.

Among the budgetary measures announced is the guided privatisation of state-owned enterprises, and Abacha announced that a national committee on privatisation and commercialisation, to be headed by him, would be established. A national trust fund to manage the proceeds from the privatisation exercise also would be created, he added.

In its first reaction to the budget Tuesday, the Manufacturers Association of Nigeria (MAN), cautioned that while it is not against privatisation, the government should ensure that companies, especially the oil refineries, do not fall into foreign hands.

The National Democratic Coalition (NADECO), a pro-democracy group, echoed similar sentiments. “…The privatisation of the refineries is the worst of all pronouncements made in the budget,” the NADECO chair Abraham Adesanya said.

Nigeria is Africa’s leading petroleum-producing country. Besides its petroleum resources, it also possesses the largest deposits of natural gas in Africa. Proven reserves are assessed at more than 2,800,000m.cu m, most of which is located with petroleum deposits in and around the Niger delta.

Abacha said that his government was prepared to offer generous incentives to foreign investors in the energy sector, “to encourage genuine investors to harness and utilise associated gas products in the country”.

These incentives include duty and value-added tax free imports of machinery, a five-year tax holiday, and tax-deductable interest on loans for gas projects, investment capital allowances and tax free dividends for five years.

The Nigerian leader however, also said that at least 20 percent of the shares in enterprises being privatised would be reserved for Nigerians.

Despite its agricultural and mineral resources, Nigeria is ranked by the World Bank as a low-income country. Although Nigeria has been implementing economic austerity measures since 1985, the country’s economic performance is still weak.

Besides the petroleum refining enterprises, telecommunications, electricity, tourism development and petrochemical companies will be up for grabs during the privatisation exercise.

Nigerian economist Ovie Agbomi said privatisation should not be viewed as a selling off of the country’s family silver, but as a means to make enterprises more competitive, and to improve pricing.

“When fully privatised, they(state-owned companies) will be forced to place their products at economic prices. It will bring to an end arbitrary price increases on services by (for example) NITEL (Nigeria Telecommunications) and NEPA (the National Electric Power Authority),” Agbomi added.

But whether the Abacha government will succeed with the privatisation programme is anyone’s guess. And, if the track record of his predecessors is anything to go by, Nigerians may see very few state-owned companies privatised or commercialised.

For example, in 1988, President Ibrahim Babangida issued a list of 110 state enterprises to be privatised or partially commercialised. A special technical committee was also set up to implement the programme which was targetted at many of the same state-owned companies, NITEL and NEPA, among others, which are still firmly in the state’s hands.

While MAN was critical of the government’s proposed privatisation programme, it described the abolition of excise duty as timely.

Gen. Abacha said in order to boost local industries, stimulate trade and reduce businesses costs, with effect from Jan. 1, all excise duties have been abolished.

The government also announced that in “order to further give tax relief to low income earners, the present level of workers’ earned income, which will be exempted from tax, is increased from 10,000 naira to 30,000 naira”.

These moves, said Achibong Ebong, MAN’s secretary for the western zone, would bring some economic relief to Nigerians, and “enhance the purchasing power of Nigerians”.

The budget breakdown by the Minister of Finance Anthony Ani on Tuesday also paid particular attention to the education sector which has been dogged by teachers’ strikes for better pay and conditions.

Some 150 million naira (about 1.8 million U.S. Dollars) have been allocated to each state to improve facilities in primary and secondary schools, as well as staff welfare.

The Secretary of the Kwara State wing of the Nigerian Union of Teachers, Wale Oyeniyi, praised government for its move to improve the country’s educational sector, and teachers’ working conditions.

In a telephone interview, Oyeniyi told IPS: “these are signs of good things to come. Hope is not lost since the head of state admitted that teachers’ salaries are inadequate and working conditions generally poor”.

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