By most assessments, Nigeria, Africa’s largest economy, with a Gross Domestic Product of $510 billion, faces a gaping infrastructure deficit. The latest estimates, put at over $300 billion, show a rapid increase over the past four years. In 2011, the Urban Development Bank approximated the infrastructure needs of the country “in excess of $200 billion.” The Infrastructure Concession and Regulatory Commission said that Nigeria would need to plough in $15 billion annually to bring infrastructure up to scratch.
This is alarming. Closing this gap demands novel and tough economic initiatives from the government. Most of the 34,120-kilometre federal road network is in a state of disrepair, largely due to poor quality, non-maintenance and age. Glaring examples of this include the Apapa-Oshodi Expressway, the Lagos-Ibadan Expressway, Sagamu-Benin Expressway, the Niger Bridge and Ilorin-Ibadan Expressway.
These road projects alone will cost about N1 trillion to execute. Yet, there are many more across the country, rendered prostrate and impassable by years of neglect. What of our railway network, electricity assets, hospitals, schools, bridges, airports, water supply, and flood control facilities that are in ruins? The list includes the four decrepit national refineries, which have led to the unbridled importation of refined petroleum products, a housing deficit of 17 million units, power infrastructure, and the National Stadium, Lagos.
A 2011 audit of abandoned projects in the country carried out by the Presidential Projects Assessment Committee headed by Ibrahim Bunu uncovered a total of 11,886 abandoned projects that would require N7.78 trillion to complete. In all probability, the N2.69 trillion paid to contractors on the projects is money flushed down the drain.
Yet, infrastructure is an important component of a modern economy. Although building infrastructure is traditionally the preserve of the government, the concept is now changing. Noticing that they are fiscally constrained, most governments around the world have instituted reforms to bridge their infrastructure deficits.
To redress its public roads deficit, the United States established the Highway Trust Fund in the late 1950s, which is financed by a fuel tax of 18.4 cents per gallon. But it is now proposing a 10-cent increase, which is likely to cost each household $9 per month. Through this, the government aims to rake in an additional $20 billion per annum.
The United Kingdom, with its latest infrastructural plan of £375 billion, is turning to private corporations in order to rescue its national assets. Six UK insurance companies have bought into the plan, pledging to provide £25 billion for funding projects. Major utilities infrastructure was privatised by the Margaret Thatcher administration in the 1980s and 1990s as a way out of the crisis.
But what is Nigeria, with a far worse economic profile, doing? Practically nothing! Over the past five years, there has been little appreciation of how to address our infrastructure deficit. In 2010, the Federal Government proposed a capital budget of N221.3 billion for the Ministry of Works. The ministry got an appropriation of N136.8 billion in 2011, N149 billion in 2012, N168.1 billion in 2013, and N100.1 billion in 2014. Usually, the government fails to fully release the budgeted sums.
However, 2015 is the year of anticlimax. The parliament appropriated a measly N11 billion, a mere drop in the ocean, for the works ministry. As a result, the ministry said only 33 out of 210 ongoing road projects had funds allocated to them, leaving 177 abandoned. This is shocking. Yet, on a weekly basis, the Federal Executive Council reels off several approved projects costing billions of naira without being tied to funding sources.
One major reason why the projects end up not being implemented or abandoned halfway is because projects are not tied to specific funding sources. Another is corruption, as whatever little is provided is largely embezzled. What is the way out of this logjam? Pouring money into the abandoned projects is a waste of time and resources. Now, the money is not even available. Therefore, the government should reassess the projects and renegotiate their costs in a transparent manner with the contractors. This means all the contractors who have collected mobilisation fees have to account for them. This is very critical as cutting down drastically on corruption will lead to the resuscitation of many of these abandoned projects.
It is after this that we can follow the examples of Asian countries like Singapore, Indonesia and Thailand, that are building needed infrastructure by tapping into funds from the ASEAN Infrastructure Fund, which mobilises funds and savings for member countries to fund development projects. Taxation is a touchy issue, especially in our clime, where government has been irresponsible, but with accountability, the government can initiate ingenious ways taxes can be used to fund infrastructure.
However, with dwindling national income, it is imperative for the government to privatise public assets like the four refineries, steel assets, airports and seaports. The income generated from such sales could be directed to social services like education and health care.
In the same vein, it should liberalise the key sectors of the economy, especially railways. For all the money pumped into the national railway system since the 1990s, a train journey between Lagos and Kano is still taking up to 36 hours, and that is when the service is available. But by getting the National Assembly to repeal the Railway Act 1955 to allow private capital, the country can bring its outmoded railway system up to speed. For example, the UK rail sector, which dates back to several centuries, was built with private capital and is run by private firms.
Certainly, we need private capital. The need to enlist private investment is illustrated in our electricity sector, with poor power supply hindering manufacturing and prompting some multinationals to move their production to other West African countries. But infrastructure spending alone is no miracle cure for our economic malaise. Experts say expanding and deepening our productive knowledge “to make a larger variety of more complex products is the surest way in stimulating a sustainable economic growth.”
