(Ecofin Agency) - The federal government of Nigeria plans to privatize 19 state-controlled companies this year, according to information provided by S&P Capital IQ, which cites the Bureau of Public Enterprises. The operation would allow the state to mobilize up to 266.7 billion naira ($724.3 million) in net revenues.
Companies to be privatized include the Bank of Agriculture and Nigeria Reinsurance Company. The first was due for privatization last year and the second since 2018. The government planned to sell 40% of Bank of Agriculture, keep 20% while the rest of the shares is to be held by the central bank of Nigeria.
For the reinsurance company, a public offering or solicitation of an association of insurers can be expected. The way transactions would be carried out has not yet been presented but local media suggest that there will be a mix of capital openings via the stock exchange, as well as through private placements.
The measure will allow the government to control its budget deficit and maintain confidence in the financial sector, especially the banks and insurance companies that are exposed to the deficit because they hold bonds issued by the Treasury. The coronavirus crisis and the oil price slump have exacerbated the country's macroeconomic fragility.