‘Implementing priority projects, key to export market access’

Jonathan Cawood is the Capital projects and Infrastructure (CP&I) Leader for PwC Africa. With many African regional economic communities embarking on ambitious trade and transport facilitation programmes designed to promote cross-border trade, Cawood, in this interview with FEMI ADEKOYA, explained how identifying and executing projects key to the economy can aid Nigeria’s market access to other regional entities.

How would you appraise Nigeria in terms of infrastructure deficit?

It depends on how people define infrastructure, because we looked at social infrastructure, manufacturing, constructive industries, and we also looked at health care, transport, logistics, power and so on. Some of the reports you see would exclude things like constructive and manufacturing infrastructure. Therefore, you might get some differences and even the $93 billion we talked about is a back log needed. What we are talking about is the spinning that is going to happen because of that $93 billion funding gap, only half of it will be funded and other part will not. We are saying that If we look at the past spin and the future spin, the GDP growth and the existing funding, we think it is likely that the spin will become $190 billion.

Poor infrastructural network has been described as a major obstacle to sub-regional trade and one that is making the journey towards regional integration long and arduous. How can Nigeria address this challenge?
If you look at most of the cities or regions that are successful, they have got very strong and good transport corridors ‎and their ports and airports are effective. If you look at Dubai, their ports and airports are effective, it is very easy to get in and go to any destination in the world and relatively cheap. If you look at Africa’s port, it is very slow and congested. Besides that, an efficient customs service must be excellent in processing containers and services quickly. We have to get the African ports working and airports with inter-modal connections working so that if any one brings in good through the ports, it is easy to get them to get their goods to different parts in the region. If you look along Africa’s value chain, things sometimes get stuck. Trucks are waiting and ships queuing outside with lots of containers stuck in traffic.

You have to look at the types of goods and services moving around. Is it oil? Is it copper? Are they natural products? Which market are you trying to serve and then build them and also try to develop these products? If you look at the projects that have been identified in Africa, they are mostly corridor projects trying to link markets. You have to identify what type of trade and logistics you need to support your economy. If you are going to promote agriculture as an export, you know what type of agricultural produce is exported through which port ‎ and then start to put it in a plan. If it is oil and gas industry, you want to get the gas into the power sector, what does that mean for the pipelines. Africa’s ports are four times longer to load and offload goods because their ships wait longer than any other part in the world.

There are questions bordering on the sustainability of many infrastructures presently being constructed in the country. How can this be addressed?
What we see is that there is a lot of focus on new infrastructure, design, construction and often we forget about existing infrastructure and maintaining it. PricewaterhouseCoopers goes from initial strategy and planning, procurement of new projects and integrating existing infrastructure. I think most of what you are referring to, for example if we take the Chinese projects, rapid construction, road and facility construction, but unfortunately after the construction, there is no maintenance culture. This is a real challenge, and I think this also has to be factored into the funding module, it is not only about building the facility but also operating it. So, if you look at a hospital for instance, it is not only about the building and equipment but also the doctors, nurse, the staff. Sometimes the government forget all these and it does not play well in the operations of the business.

‎What funding module do you think Nigeria can adopt to address the growing infrastructure deficit and also mitigate risks associated with financing such projects?
I think on one hand, it is when you transfer these risks ‎and the government in some cases, is able to achieve a much lower price on projects by taking on some of the risks. One of such risk could be demand risk. Determining who takes the demand risk for a public facility is necessary in order to mitigate crisis that may arise afterwards, especially when placing a price on such a facility. In some cases, the government will say they will take the demand risk and guarantee the exercise by paying the price differential in order to make it affordable. So I think it is putting risk with the right parties and some of these risks can be insured and there are various other insurance facilities you can take up to reduce the price.

Issues of trust in public-private partnerships often arise, especially when profit seems to supersede social responsibility of government to the public. How can such partnerships be driven to achieve its objectives?
I guess it is also starts by defining the right kind of projects with Public Private Partnerships (PPPs) because not every ‎project is appropriate for PPPs. You must make sure it is the right kind of project. Secondly, you must ensure that there is a clear PPP framework. We have seen many African countries developing a very strong PPP framework, policies, strong governance and strong procurement. This is really the key because it brings some level of trust. If somebody knows what the rules are and if they feel that their rights are being affected, they can react in groups. There are certain insurances that you can take up that protect investors against political fallout or complete change of government but I think as I have said earlier, if the rules are clear, that is the best starting point. We have seen many concessions and projects being torn up as a result of change in government.

How would you rate Nigeria in terms of project performance when compared with other African countries?
If we look at the cities of opportunity report, Lagos is ranked 7th out of 10 in terms of existing performance and in terms of future potential, I think it is number three. I also think it is rated very high in terms of opportunity and the political transition was peaceful. This will bring a lot of confidence, but what I think they will be worried about is the regulatory environment.

Do you think Lagos ‎stands the chance of sustaining its achievements and realising its potential?
Political parties need to put forward good ideas and grand vision. If you look at a place like Lagos, it is one of the 12 cities in Africa we call the mega cities. There are about 35 mega cities in the world and Lagos is going to be one of them. Urbanisation is increasing every day. So Lagos does not have a choice, it must provide for all these people moving in. Lagos must provide water, transport, social and extension services. You must plan how to develop within the city or around the city. This is the challenge of most cities in Africa because they are already congested and there are also dilapidated infrastructure and to fix and work on a city that is already congested, you have to start to develop from the outskirt or you try to do a renewal from within. In Lagos, you have to start planning to have a quick transport and logistics system in place.