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CEO of Economic Associates, Dr. Ayo Teriba, has called for a shift toward non-debt financing, specifically asset-based strategies, to manage Nigeria’s 2025 budget deficit.
Speaking in an interview with Arise News on Wednesday, Teriba stressed the importance of unlocking the value of state-owned assets and utilising equity-based financing to address the country’s growing infrastructure needs without further reliance on debt.
He said , “NNPC has no market value; it’s only if you sell oil or gas that you can make money from NNPC.”
He further emphasised that minimal steps, like initiating an initial public offering (IPO), could help unlock the potential of these assets and raise capital.
He reiterated the importance of non-debt financing options, highlighting asset financing as a viable strategy for funding the deficit.
“In trying to finance the deficit, you have two alternatives: debt financing and non-debt alternatives,” Teriba explained. “But we would be talking about non-debt alternatives.”
Clarifying the concept of asset financing, Teriba explained that it does not imply asset disposal but rather involves inviting external investors to help unlock the potential of government assets.
“When you talk about asset financing, it doesn’t mean asset disposal; it only means that you want to give external parties opportunities to invest in actualising the potential of the assets,” he stated.
Addressing the underutilization of state-owned enterprises like the Nigerian National Petroleum Company (NNPC) and other government-owned infrastructure, Teriba stressed the importance of encouraging the government to adopt asset-based funding strategies.
“It’s time to encourage the government to travel down this lane. NNPC has no market value; it’s only if you sell oil or gas that you can make money from NNPC,” he noted.
He suggested that the government could unlock more value by introducing a limited Initial Public Offering (IPO).
“Whereas, if you take the step and do some minimal IPO, you can take the market value to the market and raise asset finance bills,” he explained.
Teriba also pointed out that advocacy efforts should be directed at the government, as it owns major corporations like NNPC and the Nigerian Postal Service (NIPOST).
He highlighted a paradox in Nigeria’s financial landscape, saying, “None of these companies mentioned own themselves; the likes of NNPC and NIPOST are owned by the government. It’s interesting that the Nigerian government has supported the development of a vibrant equity market but has no issue in that equity market.”
On infrastructure financing, Teriba argued that many infrastructure projects could sustain themselves if the government embraced equity-based financing.
“For infrastructure, many of the infrastructures can fund themselves. It’s to encourage the government to consider equity-based financing and investment-grade options to finance projects,” he concluded.
Boluwatife Enome
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