A revelation by the Minister of Works and Housing, Babatunde Fashola, that the Federal Government owes road contractors N392 billion while only N276 billion is proposed for its ongoing 711 road projects in 2021 spotlights the country’s infrastructure funding crisis. The government is apparently at a loss on how to raise the over N7 trillion needed to complete current undertakings, lacks the will to place economic above political considerations and the managerial acumen to quickly drive strategic projects through. With fresh recession imminent, civil unrest barely contained and public revenues on the floor, the President, Major General Muhammadu Buhari (retd.), can change the game by adopting a more pragmatic approach to prioritising and funding critical infrastructure.
Infrastructure, an umbrella term for electricity, ICT, roads, railways, irrigation, water supply and sanitation, ports and airports, storage facilities and oil and gas pipelines, are considered the pivot of sustainable and inclusive growth. According to the International Labour Organisation, infrastructure development, poverty reduction and job creation are inextricably linked. A country with 27.1 per cent unemployment and 206 million people ought to understand this and act accordingly.
Fashola said the government would prioritise and halt new contractual arrangements. These are not enough given the magnitude of the backlog and the competing demand for funds. For one, it is not guaranteed that the National Assembly will approve the N276 billion proposed, or that revenue targets would be met. In 2016, NASS approved only N16 billion for the Lagos-Ibadan Expressway when contractors were owed N15 billion backlog. In 2015, the ministry got only N11 billion for capital projects!
In 2011, a federal panel reported 11,999 uncompleted federal infrastructure projects around the country requiring N7.7 trillion to complete. Many more have since joined as the weekly Federal Executive Council delights in endlessly announcing contracts. Yet, of the 200,000 kilometres of roads in the country, the National Planning Commission adjudges only about 27 per cent to be fairly motorable. Airports, railways, ports, social infrastructure and supporting equipment are similarly terribly inadequate and existing ones in various stages of decrepitude.
The African Development Bank says the country needs to invest $3 trillion between now and 2044 when its population is projected to top 350 million. The IFC suggests $16 billion each year. The power sector is most pathetic. Existing infrastructure can convey only an average of 4,000 megawatts to businesses and households. Our rivals, South Africa and Egypt have 51,300MW and 55,000MW respectively. In 2017, Oxfam ranked Nigeria 41st out of 41 African countries for spending on social infrastructure.
Redressing the deficit has defeated successive Nigerian governments. Perpetually, funding for capital projects is below 30 per cent in the yearly budget, while federal, states and LGs squander resources on the bureaucracy and luxurious living for officials.
The problem lies in the skewed structure of the Nigerian economy where the state has an overbearing role. Oxford Urbanists, a British think tank, cited the failure to change the inherited colonial and immediate post-independence template of government being solely responsible for infrastructure provision with marginal role for the private sector. Inherent inefficiencies include “a heavy and cumbersome bureaucracy resulting in high cost of delivery, improper planning, political interference, lack of accountability and transparency, inappropriate economic settings, inadequate capital and lack of appreciation of free inter-play of market forces of demand and supply.” The World Bank found that of 502 identified projects worth $78 billion by the private sector in sub-Saharan Africa between 1990 and 2018, Nigeria accounted for only 54 projects (9.76 per cent) valued at $12 billion (14.9 per cent) spanning the energy, ICT and transport sectors.
Experts recommend a careful mix of public spending, well-targeted loans and aid and private capital. The government does not have the funds, so open up to private capital through Public-Private Partnership, outright privatisation and a liberalisation and radical improvement in the ease of doing business. Without massive foreign direct investment, the economy goes nowhere, especially in the area of power where the government needs to loosen its own grip and those of the current under-performing operators. It must stop its frenzied borrowing for railways, airports and ports and privatise to reputable investors. Elsewhere, the Asia Development Bank explained how Singapore became Asia’s infrastructure hub by opening up to allow “local and multinational companies play a significant role in the development of Singapore’s robust infrastructure ecosystem.”
Priority should be accorded to those projects that help generate huge revenue such as the Apapa Ports complex and access roads, Lagos-Ibadan Expressway and Second Niger Bridge. Concessions and outsourcing of the ports and airports should be done post-haste and strictly targeted at drawing in only the world’s first rate operators. Buhari and his team should de-link political considerations from critical infrastructure planning at this time of adversity. All tiers of government should accord priority to rural infrastructure to stimulate job creation and reduce poverty.