The idea to put up this article came in response to Pseudo-Independent's comment about hoping that the incoming administration will enforce the Public Procurement Bill. It's a great initiative in writing but will our incoming government walk the talk that the outgoing OBJ administration has been talking for the last 8 years? Reflecting on the past 8 years, do you think that the OBJ regime has put a lot more effort into lip service than actual implementation, when it comes to corruption and good governance? On the other hand, is that effort well placed in that he has at least set up the platform for the next administration to actually DO more?
Eurasia Group Note - NIGERIA: Obasanjo's fire sale of state assets continue
Mocking its own previous sermons about corruption and good governance, Nigeria's outgoing regime late on 17 May agreed to sell a majority stake in the country's largest oil refinery, the 200,000 bpd Port Harcourt Refinery, for $561mn to a newly created company controlled by some of the ruling party's largest campaign donors. The sale comes barely a week after the government organized a hasty sale of over 40 oil blocks to similar interests. The new owners of the refinery include a company, Dangote, best known for its flour and sugar operations, another, Zenon Oil, which is a major importer of refined products, and a third, Transcorp, which is essentially insolvent and in which outgoing President Olusegun Obasanjo has previously conceded that his family held some equity interests. Nigeria which consumes almost 350,000 barrels of refined product a day is unlikely curb its imports anytime soon. Nigeria's top domestic banks helped to underwrite the deal.
On another note, the sale of the Port Harcourt Refinery to the Dangote-led consortium and the previous sale of Nigeria's state-owned fixed line telephone company NITEL to Transcorp, another entity in which Obasanjo admitted to having owned significant equity, as well as the questionable sale of the country's largest hotel, Abuja Niccon Hilton, to Transcorp both raise questions about the sincerity of the country's
anti-corruption efforts. The fact that all these deals were underwritten by the country's largest banks also calls into question the business and good governance credentials of some of Nigeria's leading financial institutions.
Whether President-elect Umaru Yar'Adua takes action to reverse some of these controversial and opaque financial transactions remains to be seen. But unless he does, it is unlikely that any political settlement between him and his major political opponents, who have been completely cut out of all these deals, can't happen. On the other hand, if the supposedly stern and ethically devout Yar'Adua reverses some of these sales, he will run into political problems not only with Obasanjo, but with the country's top banks, almost all of which are exposed to these deals and could see their bad loan books affected.
All in all, these questionable financial transactions in the final days of the Obasanjo administration are a sign that the introduction of "democracy" into sub-Saharan Africa will not decrease corruption in the short term. Indeed, corruption is likely to increase in the short-term as new political parties on the continent need funds from oligarchs to run victorious campaigns, and fire sales of state-owned assets to major campaign donors is likely the only rational consequence, since
most ordinary voters on the continent are too poor to contribute to political parties.
Eurasia Group is the world's leading global political risk advisory and consulting firm. They cover political, social, security and economic developments worldwide and their impact on business and financial markets on a daily basis.