- Sets target of N100tn asset growth in 10 years ….Orders kickoff of amendment of MOFI Act, other legislations to institutionalize reform….Some of listed companies are dead and buried already – Usman
From Juliana Taiwo-Obalonye, Abuja
President Muhammadu Buhari on Wednesday, inaugurated the Governing Council, Board of Directors and Executive Management Team of the Ministry of Finance Incorporated (MOFI).
He has also directed the Minister of Finance, Budget and National Planning, Zainab Ahmed to commence the process of amending the MOFI Act and other legislations to further institutionalize this reform and ensure that MOFI is restructured and repositioned to become a trusted custodian and manager of Federal Government investments and assets.
MOFI is an investment vehicle, as part of overall measures to revive and restructure non- performing assets and boost government revenue.
At the official launch at the council chambers of the State House, Abuja, he tasked the new Board chaired by former minister of Finance, Shamsudeen Usman, to raise the value of MOFI’s portfolio from the current N18 trillion to N100 trillion by 2033.
In his address, the President said the governing council is fully set up as a world class investment company with a new management and board, with core professionals with specialisation in portfolio management.
He said the new leadership will take steps to mobilise capital and invest same in assets that are critical to the Federal Government’s revenue drive.
This, he said, will involve turning the country’s current assets into aggressive cash flow generating entities.
According to Buhari, the inauguration of Governing Council, Board and Executive Management Board became necessary to optimize returns on existing investments.
The Governing Council is chaired by the President, with the Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, as Vice Chair.
It’s members include the Minister of Petroleum Resources, Timipre Sylva (State); Aviation, Hadi Sirika; Industry, Trade and Investment, Niyi Adebayo, Transportation, Mu’azu Sambo; Central Bank Governor, Dr Godwin Emefiele and three experts appointed by the President: Prof. Muhammad Sagagi, Dr Ayo Teriba and Prof. Ken Ife.
The Board members include: Former Finance Minister, Shamsudeen Umar (Chairman), Permanent Secretaries of the Ministries of Finance and Petroleum Resources, Acting Accountant-General of the Federation, Olawale Edun, Fatima Mede, Ike Chioke, Muhammad Nda, Alheri Nyako and an executive from the CBN. Members of the Executive Management Team are: Dr Armstrong Takang (MD), Eric solo (ED, Chief Portfolio Officer), Sani Yakubu (Chief Investment Officer), Oluwakemi Owonubi (Chief Risk Officer).
The President also tasked the new board to, “be the clearinghouse for the management of Federal Government investments and assets in line with global best practices with a view to ensuring that these investments are delivering superior risk-adjusted returns to the government.”
He also called on the new MOFI to, “work with other MDAs to create a consolidated national asset register with a view to converting these assets into cashflow-generating entities to support the government’s revenue drive and; partner with the government with a view to using government-owned investments and assets to support the government in delivering on its social and economic obligations to the citizenry.”
President Buhari said the event was significant as the restructured MOFI will help identify “what we own” and how to get the best out of them.
According to him, the MOFI Act of 1959 now Cap. 229, Laws of the Federation, 2004 “explicitly empowers MOFI to enter into commercial transactions of any description on behalf of the Federal Government of Nigeria in its own name. As a result, MOFI was used as a Special Purpose Vehicle across different sectors, to invest in commercial entities over the last 64 years. To put this in context, MOFI was created even before Nigeria’s independence.”
Speaking further, he said “MOFI was not structured to be governed or resourced to deliver on the mandate that was expected of it. MOFI’s peers, on the other hand, that were deliberately set up with the institutional framework, governance structure, and execution capacity have gone on to make major social and economic impacts in their respective nations. Many of which have become global brands for investing domestically and internationally.
“As part of the governance structure, there will be a Governing Council headed by me, a Board of Directors under the leadership of a former Minister of Finance, Dr Shamsudeen Usman, and an Executive Management Team headed by Dr Armstrong Takang,” he said.
President Buhari reminded members of the Governing Council as well as Board of Directors that this Administration expected much from them. Specifically, he tasked Ministers who are members to “create an enabling environment that will facilitate the creation of a National Asset Register that will be harnessed to strengthen our fiscal and economic realities and the optimization of our investments and assets that will be under the purview of MOFI.”
In her remarks, the Minister of Finance, Budget and National Planning thanked President Buhari for his support and approvals that have made the restructuring and repositioning of MOFI possible, assuring him that Council members and Board will ensure that the new MOFI delivers on its mandates.
The board chairman, Usman said although their task is mighty and difficult, they are relying on three things: “One is that the quality of the people that have been appointed to the board, and to the Governing Council. Second is the amount of initial work that has been done already and third the experience of other countries.”
He added: “Luckily, a lot of work has been done. consultants have been appointed and they’ve done a 10 year strategic plan that has actually identified most of the key things that need to be done.”
He added: “The President mentioned the experience of Tommasi in Singapore. There’s many other examples of countries that have turned their national investments into assets that are generating income.
“Unfortunately, for us, MOFI has been a very silent and more or less lazy owner of some of the biggest assets that we have in this country, estimated value currently of about N18-19 trillion. And clearly these assets can be turned around with good corporate governance, with corporate restructuring to produce, first of all to enhance their value, as well as to unlock other opportunities for cooperating with the private sector.
“So I think the nuance is slightly different. You remember the earlier, privatisation, commercialisation, which I participated, I was the first director-general of TCPC, we started the first privatization. Then the point was now two elements, selling some of the assets by restructuring companies like NEPA, NITEL, at the time to turn them around. Unfortunately, along the line, we lost direction. So now the focus is not so much on the selling of these assets, but on turning them around for the benefit of Nigeria.”
Asked to name some of these assets the board will be looking at to carry out this humongous task of growing N18 trillion to N100 trillion in 10 years, the former finance minister said: “First of all, we will do a detailed inventory of these assets to produce a credible National Register of these assets. I can tell you some of them for now. But I think really the more important point is, there is no body in government today that can tell you with certainty, this is 100% the assets owned by the government. Unfortunately, we are in that situation, some work has started. That’s why we arrived at this estimated at N18- N19 trillion. But there are some that are even not known. There’s a lot of uncertainty. Where are they? Where are they all over the country? What’s the value? And how can we turn them around?
“I’ve seen the list for example, some of the quoted companies, in which the government owns shares, are dead already, dead and gone. But it is in the register, that government is still owning some of those shares, but the companies are no more.
“You know, I think in terms of the major assets today, I mean, the petroleum assets for example are huge. NNPC itself is partly owned by MoFI, the Bank of Industry, bank of agriculture, NEXIM our shareholding in the Islamic bank, African Development Bank these are all assets we own. And then of course, there are some that you know, they are more or less either dead or not yielding anything.
“Some of them, we took loans to set them up. They are supposed to be commercial ventures that are supposed to actually generate the repayment of those loans. Now, in some cases, the government has paid the loans. And those institutions are still being baby nursed by the government.
“I don’t want to give any specific example. I don’t want to embarrass some of the MDs of those companies. So we have to work on those to say, look, how do we restructure you in such a way that you begin to yield revenue to the government. And where some of the loans are outstanding, can we generate some of the repayment of the loans from the activities of those corporations.”
Asked the board intend to manage the conflict between ICRC and BPE, since MoFI has been declared a clearing house for asset sale, Usman said: “Well, I don’t want to comment on that. But certainly, you know, as a former minister, I know that there are those potential conflicts, I think what we’ll do is we will try and work together with all those agents. Luckily, in the background work that was done, as you heard in the minister’s speech and in the president’s, those agencies were actually involved as part of the committee that did the initial work. So we will continue the consultation. And I’m sure at the end of the day, we will do what is in the best interest of Nigeria.
Asked how the board intends to function after the expiration of the current administration’s tenure, he said: “Clearly from the intention of setting up this institution, you know that it is going to fill a major gap in terms of managing the investment of this country. I will say that, well, obviously it’s up to the new government when they come in. But my hope is that they will actually see the benefits of this exercise and ask us to carry on.“