NIGERIA’S INFRASTRUCTURE DEVELOPMENT AND THE NEED FOR PRIVATE SECTOR PLAYERS PARTICIPATION

BY SHIKTRA SHALANGWA

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Investment in sustainable infrastructure plays a crucial role in economic and overall societal development. It makes an indispensable contribution to more inclusive economic, social and environmental conditions that can encourage growth.

Global policy actions are focused on both promoting higher levels of investment in infrastructure for sustainable growth and maximizing its long-term benefits to society.

Countries may be classified as either developed or developing based on the gross domestic product or gross national income per capita, the level of industrialization, the general standard of living, and the amount of technological infrastructure, among several other potential factors.

Nigeria has an infrastructure deficit and this, therefore, calls for an urgent need to leverage private sector capital in a variety of ways. This includes creating special purpose vehicles for financing projects while developing Public-Private-Partnerships or PPPs and investments.

Nigeria’s infrastructure deficit is estimated at $100 billion annually, which is 189.77% above the 2021 Federal Budget. The private sector is more effective and has shown over the years that it guarantees quality delivery of infrastructure in the country.

Therefore, Private sector collaboration with the government would enhance investments for infrastructure development in the country.

Operators in the Debt Capital Market have also stressed the need for government to increase private sector involvement in Nigeria’s infrastructure development. As the government continues to communicate its commitment to investing more in the country’s infrastructure, the role of the private sector will ensure the needed capital is channelled into the extremely vital areas. This should in turn drive the much-needed National growth and development.

Private investors are however faced with challenges of a poor regulatory framework and the inability of the public sector to keep to the contractual agreements. These have reduced the desirability of PPPs in Nigeria. Although the private sector is charged with the responsibility of executing the projects, the public sector has an obligation to properly monitor the implementation process.

Lack of thorough review and understanding of the contracts and their inherent implications makes it difficult for the public sector to follow through with the contracts.

Some projects have failed and about six were suspended as investors were unable to follow through with the contracts. Nine failed projects have undermined the Nigerian government’s infrastructure development drive and constituted a deterrence to private investors’ participation in PPPs.

This is not to say there is no success story recorded through the PPP’s. There are many, such as in the transportation sector, the Railways to be specific. The Nigerian Government is already partnering with China through the  China Civil and Engineering Construction Company on the completion of railway projects in the country. Huge successes have been recorded already.

On one of the routes – the Kaduna-Abuja Route, 130 million naira monthly revenue is being generated. The Itakpe-Warri route which also runs freight services has created more jobs for Nigerians and promoted ease of doing business along the route. The Lagos-Ibadan route is expected to generate at least 1.12 billion naira annually.

The Infrastructure Concession Regulatory Commission which is the regulatory body for the implementation of the PPP framework for infrastructure development in Nigeria has about 76 PPP projects under implementation, including the recently approved Bonny Deep Water Port Project, the Nigerian Correctional Service’s (NCS) Shoe and Garment Factories Projects, and the Port Harcourt Industrial Park Project.

All that is left is for the Nigerian PPP regulatory framework to be revamped in order to attract greater investment in infrastructural development in Nigeria.

Although the private sector is responsible for the implementation of PPP projects, the public sector needs to be more involved, especially in the preliminary studies and evaluations of the projects, so as to have a good grasp of the requirements.

Other issues to be addressed include improved commitment to the terms of the contracts, more detailed preliminary assessments and feasibility studies, which highlight the need to involve well trained and experienced professionals in the PPP contract development and proper handling of social unrest and security issues.

Once the necessary requirements for effective PPPs are in place, the infrastructure deficit in the country would definitely be a thing of the past.

 

PIAK

1 Comment
  1. Abba Aliyu abubakar says

    Good

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