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How to reduce infrastructure deficit, free funds for social investments, by Atiku

By Kehinde Olatunji
15 June 2022   |   3:37 am
Presidential candidate of the Peoples Democratic Party (PDP) for the 2023 general elections, Atiku Abubakar, has responded to observations of the National Union of Electricity Employees...

Atiku Abubakar. (Photo by PIUS UTOMI EKPEI / AFP)

Presidential candidate of the Peoples Democratic Party (PDP) for the 2023 general elections, Atiku Abubakar, has responded to observations of the National Union of Electricity Employees (NUEE) to his (Atiku’s) agenda, as it relates to development of critical infrastructure needed to unleash full potential of the nation’s economy.

This was contained in a statement signed by Media Adviser to Atiku, Paul Ibe. The statement reads in part: “First of all, we wish to appreciate that Atiku Abubakar’s policy prescriptions contained in ‘My Covenant With Nigerians’ are getting due attention. Our objective is to have Nigerians, who will be the beneficiaries of the policy framework to interrogate it.

“Having said that, it is important to emphasise that actively promoting private sector participation in infrastructure development will be beneficial to the economy. It is also inevitable that we incentivise the private sector to take risk and invest in the economy for the following reasons.

“There is no telling that Nigeria’s huge infrastructure deficit is making businesses uncompetitive and stunting economic growth. The supply of efficient infrastructure, including roads and rail transportation, communication, adequate power etcetera is extremely important for the economy to grow and create much-needed jobs.

“Therefore, to build the economy of our dreams, we must increase the stock and improve the quality of our infrastructure. Inadequate infrastructure has been identified as the most problematic factor for doing business in Nigeria.

“In terms of actual spending, Nigeria currently spends less than one per cent of its yearly GDP on infrastructure as against the required levels of between three per cent to five per cent of yearly GDP. This shortfall has created a deficit, estimated at $3 trillion over the next 30 years.”

“Our overwhelmed public sector does not have the resources or expertise to deliver. While our financing requirement is approximately $100 billion per annum, Nigeria’s entire budget is only $30 billion. The National Development Plan envisages that 80 per cent of all investments will come from the private sector.

“Regrettably, Nigeria’s core infrastructure sectors are not operating efficiently. Almost all the infrastructure sectors from roads, railways, housing, power and energy are operating below potential. Over the years, we have observed how these enterprises consume huge public resources while offering poor quality services. Many of these state-owned enterprises have become a source for political patronage, corruption, and rent seeking, to the detriment of Nigeria’s long-term economic growth.

“For example, Nigeria’s refining infrastructure remains poor despite the perennial injection of unending public resources for turnaround maintenance. The country’s refining capacity per capita is 0.002 bpd/capita compared to Libya’s 0.06 bpd/capita and South Africa’s 0.01 bpd/capita. As of today, Nigeria imports over 80 per cent of its refined products to meet its current needs and is said to be the largest importer of Premium Motor Spirit in the world, with significant balance of trade implications.

“Sadly, the fiscal cost of maintaining these State-Owned Enterprises is enormous, and it comes with even greater opportunity costs. By holding unto these underperforming enterprises, Nigeria is sacrificing investments in critical areas, including education, health, water, sanitation, and rural infrastructure.

“For example, the first phase in the rehabilitation of Nigeria’s refineries is expected to gulp $1.55 billion! With its current precarious fiscal position and daunting development challenges, Nigeria cannot afford to forego productivity enhancing investments in human capital development and channel scarce resources to moribund enterprises.

“We need to stress that the vision of Atiku Abubakar, as encapsulated in ‘My Covenant With Nigeria’, is to drive private investment to shift Nigeria from being a “net importer” to a “net exporter” of petroleum products and become the refining hub of the entire West Africa region.

“We cannot hope to achieve this without extensive reforms to restore investor confidence, which is currently at its lowest ebb. The active participation of the private sector in the downstream sector will help drive efficiency and healthy competition in the oil and gas sector.”

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