According to The Economist Intelligence Unit report for July 2021. The BPE intends to raise N493.4 billion (US$1.2 billion) from selling these state-owned assets, which include power-generation plants and free-trade zones.
The objectives of privatization are to generate cash for the government and in the process reduce operational inefficiencies and improve productivity through private investment. Such a large wave of privatizations is a testament to significant shortfalls in oil and non-oil earnings.
None of the reports provides exact or estimated figures as to the total sum of money the government expects to raise from the privatization exercise
The report said, “Privatization receipts will not compensate for an abysmally low tax take or an over-dependence on oil revenue. Because of this, we continue to expect upcoming budgets to include new taxes or increases to existing taxes, in particular value-added tax (VAT).”
“We continue to expect a VAT hike to 15%, a revenue measure that appears unavoidable considering persistent budget deficits. However, we continue to expect fiscal deficits in 2021-25, averaging 2.9% of GDP a year.”
Furthermore, significant shortages in oil and non-oil earnings have resulted in such a massive wave of privatizations. Fiscal revenue was 44.6 % below official budget predictions in the first five months of 2021 and infrastructure investment was considerably below plan
