On Infrastructure Development Fund
Ordinarily, the Federal Government’s plan to establish another intervention fund, the Infrastructure Development Fund, should be celebrated given the nation’s dire need of improvement in that area. But the history of such intervention in Nigeria is replete with agony occasioned by corruption and noble purpose defeated by ignoble people. So, caution please!
The US$25 billion Fund which is said to be contained in the 2017-2019 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) has already been forwarded to the National Assembly for consideration and approval. The Fund would enable the government to attract what has been described as “non-budgetary resources” that would be used to finance the development of infrastructure projects. Although it is not clear what “non-budgetary resources” means, it seems to connote that the fund will not be subject to appropriation by the National Assembly in which case, its use will be at the whims and caprices of the executive and may, of course, be riddled with corruption.
As the government proposes to establish another of such an intervention fund, it is important to remind all that many of such funds had been unfolded by the government and many stakeholders are unaware of what roles the funds had performed. The challenges that necessitated their set-up remain not just unresolved but exacerbated.
It is also apt to remind the President Muhammadu Buhari-led government that there exists an Infrastructure Bank in the country set up to anchor the financing of infrastructure in Nigeria. That bank, Infrastructure Bank Plc (formerly known as Urban Development Bank of Nigeria Plc) was established under Decree Number 51 of 1992. It has its main offices in Abuja and Lagos and is described as Nigeria’s dedicated infrastructure bank providing “financial solutions to support key long-term infrastructure projects” that include transportation, housing, water, power and renewable energy. Ownership of the bank is spread among the Federal, state and local governments, the Nigeria Labour Congress (NLC) and the private sector that is in the majority. Although the bank was initially sponsored by the government, today it is private sector-led, focusing on “funding commercially viable projects that have significant development impact.” It also assists “both public institutions and private sector companies involved in the delivery of infrastructure services by providing specially designed development loans, which are price competitive and have medium to long-term tenors”.
So, since there is such a bank, with government involvement and whose responsibility is to fund infrastructure in the country, why is it still necessary to create an Infrastructure Fund that will not be subject to appropriation? Would such a fund not constitute a duplication of efforts, structures, management and other facilities, tantamount to encouragement of wastage of funds? At this time of revenue crunch, it is expected that efforts should be directed to attracting increased revenue and ensuring cost efficiency. Thus, every temptation to duplicate efforts or indeed, create costly confusion must be avoided.
If the government is sincere about what it wants to do to fund infrastructure adequately, the most pragmatic, simplest and even most credible approach would be to cause a reform and recapitalisation of the existing Infrastructure Bank with a view to ensuring that it would deliver on its mandate. Prior to such reform should be a thorough review and evaluation of the bank’s performance and challenges that might have constrained it from meeting the needs of the nation in the past 24 years, as well as proffering enduring solutions. In pursuit of such reform, there will be need to situate the bank’s existing mandate, structure, management, policies and procedures within what is or will be expected of it henceforth. The government could then use the proposed US$25 billion to increase its shareholding in the bank. This will give the government additional leverage to obtain substantial amount for the development of impactful infrastructure.
It must be emphasised that if the government goes through the bank to obtain funding for infrastructure the likelihood exists that application of the funds will be monitored and supervised by the bank to ensure the purposes for the credit facilities are met. In other words, there will be improved governance by the government in the utilisation of loans from the infrastructure bank. If this is what the government is trying to avoid by choosing to set up the Infrastructure Development Fund, it is imperative that government is told in clear terms that its intention is short of transparency and would not serve the ultimate needs of the people and thus, should be withdrawn.
Notwithstanding the foregoing, if the government insists on going ahead with its proposal, it must properly define the true purpose of the fund, the objectives, targets or milestones to be achieved. For instance, would the fund cover infrastructure maintenance, refurbishment/rehabilitation/ renovation, improvement, expansion and creation of new ones? Would it cover short, medium or long-tenured projects? These will assist in holding government accountable by the citizens. Of course, the operating, management and governance frameworks must also be put in place.
Finally, prior to establishing the Infrastructure Development Fund, the important questions this government must satisfactorily answer are with the non-existence of functional infrastructure in a nation of over 170 million people, is the US$25 billion enough to cause appreciable and acceptable level of infrastructure development in the country? And if so, within what period of time? What is the source of the Fund? Whatever answers may be proffered, it is important government recognises upfront that it owes the people of this nation the duty of transparency and absolute honesty in the implementation of the Fund. It also has a duty to explain to the masses what to expect. All stakeholders must ensure that government is truly held accountable, especially by monitoring and evaluating progress based on set objectives and targets.