The infrastructure imperative
Sir: If there is a consensus right now in Nigeria, it is on the need for investment in infrastructure in order to reduce the cost of doing business in the country and making Nigerian businesses competitive. For Nigeria, the lack of adequate infrastructure serves as one of the most significant obstacles to building, sustaining and distributing wealth.
According to the National Planning Commission’s “National Integrated Infrastructure Master Plan,” Nigeria needs to spend USD3.0 trillion over the next 30 years in order to close the infrastructure gap. Similarly a 2011 World Bank publication assessed that Nigeria needs to increase its spending to a total of USD142 billion, with USD10.5 billion per annum needed for federal infrastructure and USD3.7 billion for municipal level assets over the same time frame.
The development of infrastructure in Nigeria has customarily been financed through traditional forms of contract-awards by the government; but in the face of diminished government revenue, the Federal Government has sought to leverage more on debt-financing with the government expressing its intention to borrow USD30 billion in order to finance major infrastructure projects across the federation.
The government has assured the Nigerian public that the loan will be strictly applied to infrastructure-financing. In light of these challenges, it has been suggested that “Public-Private Partnerships” (PPP) offers a more sustainable and efficient mode of financing infrastructure in Nigeria. PPPs are essentially contractual arrangements between the government and private companies for the purpose of financing, building, operating and or maintaining of infrastructure projects.
An excellent example of a completed PPP project is the concessioned Onne Oil and Gas Free Trade Zone port facility in Rivers State, where over 169 companies in the oil and gas sector are running operations. The advantages of the PPP model for infrastructure-financing are several. A few of these advantages include: the accelerated provision of infrastructure; job creation as the utilisation of PPP occasionally entails a joint venture with large international firms, which usually provides opportunities for local firms in areas such as civil works, facility management; transfer of technology and expertise as PPPs afford the public sector the opportunity to adopt and leverage on the expertise, experience and technology of the private sector and savings as PPP arrangements remove the responsibility of funding projects from the government’s balance sheet, thus saving the money for the country, which can be invested into other critical sectors.
The government should also preserve the independence of the Central Bank to independently determine monetary policy and ensure a friendly tax and regulatory environment. It is hoped that Nigeria’s policymakers will see the need to fully embrace the utilisation of PPP in the financing of infrastructure. Nigeria has all to gain and nothing to lose from the adoption and utilisation of public-private-partnerships.
• Ugochukwu J. Amasike, a lawyer, wrote from Lagos.
No comments yet