Nigeria’s Costly Infrastructure Roll-Out

Nigeria needs to spend at least 839 billion US dollars by 2030 to address the massive infrastructure deficit in the country.
Wale Shonibare, Deputy Group CEO of United Capital told CNBC Africa that in terms of reforms to date, there has been very little progress. He said there was a remodelling of the airports however that has “slowed down”.

To provide a steady lift to the transport sector through private public partnership (PPP) initiatives, Shonibare said, “For the transport sector, we need an integrated transport policy in the country and it needs to focus on trying to provide different modes of transport in the country.”

He said within the railway sector, there needs to be an amendment to Nigeria’s Railway Act to allow the private sector to be able to run railway networks. Currently, it’s the Nigerian Railway Authority that is allowed to build railways.
According to Shonibare, once these stringent rules are more relaxed then the private sector can be included in building infrastructure.

Shonibare proposed that a progression to the privatisation of airports is “critical”. “Airports are actually a key sector where the private sector has been shown to succeed the world over, you just need to commercialise the operations.

He admitted to the airport privatisation problems that have previously occurred. “There’s no alternative to making sure that you have sanctity of contract, those problems that have occurred with other privatisations have been because one party or another has not kept to the contractual agreements.”

To ensure a healthy PPP relationship, Shonibare said governments must honour and full the correct legal protocol of maintaining and dissolving contracts.

The current state of the Nigerian transport system needs reforms to attract foreign investment. “We’ve had a fairly successful port privatisation in this country  and that has attracted significant investment into the country… because of the reforms, “ cited Shonibare.

He said the key lesson is for PPPs to be structured correctly to ensure that the private sector is taking risks that it can best manage. “We have to make sure we are not taking shortcuts, where there is an attractive investment opportunity, capital will always come in.”