Using assets in the public sector

1. Using assets in the public sector
Dr Alberto Asquer

2. Public sector assets
Assets of the government
• Tangible assets
• Intangible assets
• Financial assets

3. Public sector assets
Tangible assets
• Land
• Infrastructure (e.g., harbours, highways, airports)
• Non-renewable resources (e.g., oil, gas, minerals)
• Renewable resources (e.g., forestry and fisheries)
• Real estate (e.g., buildings, historical heritage, and
pieces of art)

4. Public sector assets
Intangible assets
• Immaterial resources (e.g., radio spectrum)
• Intellectual property (e.g., patents)
• Know how (e.g., diplomatic skills)
• Reputation (e.g., creditworthiness)

5. Public sector assets
Financial assets
• Shares or stocks (e.g., state-owned enterprises)
• Other securities (e.g., other countries’ treasury
bonds)
• Investment funds (e.g., sovereign wealth funds –
SWF)

6. Revenue generation from public assets
Keep control
of the asset
Give away control
of the asset
Give away ownership
of the asset
Keep ownership
of the asset
Make the asset
generate
revenue
Privatisation
Rent out
Sale and
leaseback

7. Revenue generation from public assets
Keep control
of the asset
Give away control
of the asset
Give away ownership
of the asset
Keep ownership
of the asset
Privatisation
Rent out
Sale and
leaseback
State-owned
enterprises (SOEs)
Make the asset
generate
revenue

8. Revenue generation from public assets
Keep control
of the asset
Give away control
of the asset
Give away ownership
of the asset
Keep ownership
of the asset
Privatisation
Rent out
Sale and
leaseback
Concessions
of assets
Make the asset
generate
revenue

9. Natural resources (oil, gas, minerals, etc.) are important
components of public sector revenues in many countries
SOEs and concessions of assets

10. Example:
Botswana takes about 40% public revenues from diamonds
extraction, which help support education and other policies
SOEs and concessions of assets

11. Revenue from natural resources is uncertain:
• Size of the field
• Technological change
• Collusion of producers into a cartel
• Dependency on private and/or foreign partners and
intermediaries
• Market conditions (price and exchange rate fluctuations)
• Misappropriations
• Political regime conditions
SOEs and concessions of assets

12. Sometimes, revenue from natural resources may be
detrimental to the domestic economy:
• Capital and skilled labour may concentrate in the natural
resource industry only, with negative effects on other
sectors of the economy
• Exports of natural resources may result in higher
exchange rates with negative effects on other sectors of
the economy which are oriented to exports
• They may induce lavish public spending in unnecessary
public policies and programmes
The “resource curse”
SOEs and concessions of assets

13. Revenues from natural resources
The resource curse

14. Revenues from natural resources
Examples of “resource curse”:
• Oil extraction in Nigeria
• Gold extraction in South Africa
• Oil extraction in Angola

15. Revenues from natural resources
Example of best practice: Norway
• The government reinvested early profits generated by
state-owned oil companies into searching for more oil
fields
• Since 1990s, it created a sovereign fund declaring oil
revenues property of future generations of Norwegians
• Only 4% of oil revenues are used for investment in
infrastructure and other public projects
• The rest is invested abroad for also securing funding of
pension plans of Norwegians

16. Revenue generation from public assets
Keep control
of the asset
Give away control
of the asset
Give away ownership
of the asset
Keep ownership
of the asset
Privatisation
Rent out
Sale and
leaseback
Sale of assets
Make the asset
generate
revenue

17. Revenues from privatisation
Main reasons for privatisation
• To raise revenue for the state
• To reduce government’s role in the economy
• To introduce competition
• To promote economic efficiency
• To promote wider share ownership

18. Revenue generation from public assets
Keep control
of the asset
Give away control
of the asset
Give away ownership
of the asset
Keep ownership
of the asset
Privatisation
Rent out
Sale and
leaseback
Real estate
Make the asset
generate
revenue

19. The end