‘Government should explore innovative finance to fund infrastructure’
MOHAMMED ABBA TOR is the President, Nigerian Institute of Quantity Surveyors (NIQS). He spoke to the Property & Environment Editor, CHINEDUM UWAEGBULAM on the need for stakeholders’ engagement forum to woo the private sector under the Executive Order 007 and ways to stave off recession in the construction industry.
The Federal Government introduced Executive Order No. 007 of 2019 that focused on Road Infrastructure Development and Refurbishment Investment Tax Credit scheme early last year. How has this impacted on the construction industry? What has been the involvement of the professionals, especially quantity surveyors?
The Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme is an innovative financing model with high potential of fast-tracking provision of road networks in the country. The scheme seeks to engage private entities to construct/refurbish road infrastructure, which in return entitles them to recover the funds so expended through tax credit. I assume you are referring to impacts on the industry at construction phase or level. Not much is heard though, but I believe so much is being done behind the scene. Such scheme require lots of planning and detailing prior to launching out and is expected to eventually have positive impacts on the construction industry. Our members are poised to play their roles as costing and cost management professionals in the scheme.
Meanwhile, it is important for the management committee of the scheme to organize stakeholders’ engagement forum with a view to having the buy in of the private sector participants, in the interest of the nation.
There has been dearth of quantity surveyors in the government’s Ministries, Department and Agencies (MDAs), which has created loopholes in evaluation of projects. What’s the Institute doing to ensure construction projects are executed in line with international best practices?
I agree with you that our members in the employment of Government Ministries, Departments and Agencies (MDAs) are fewer when compared to other professionals in the built environment. For instance, I am aware that in the Public Building and Housing Development Department of Federal Ministry of Works and Housing, there are relatively fewer quantity surveyors than architects, engineers or builders. We do visit the various MDAs sustainably and part of the message is the employment of more quantity surveyors, due to the critical roles they play in project delivery. The institute is also scaling up membership drive and more of our members will join the public service to contribute their quota optimally to national development. However, we urge the relevant MDAs to put the skills and competencies of quantity surveyors in their employment to maximum use, due to their value creation capabilities.
Quantity surveyors are diligent in procurement planning, contract management, cost control and cost performance measurements through tools and techniques such as interim valuations, financial statements, earned value analysis and final accounts in accordance with global standards and protocols.
NIQS is at the forefront of advocating and deepening adoption of international best practices in management of construction projects in the country. In pursuance of that objective, NIQS conducted several trainings and workshops on the subject matter over the years. In demonstration of that commitment, the institute has concluded plans to conduct a workshop titled “Construction Projects and Contract Management: Benchmarking International Best Practices” originally scheduled to be held in Kaduna, but was postponed due the Covid-19 pandemic.
As the new NIQS president, what type of reforms are you bringing on board in the institute that will boost the construction industry in Nigeria?
The Nigerian Institute Quantity Surveyors marked her 50 years of existence in October 2019. As we begin the second 50 years, there is the need to recognize the challenges posed to quantity surveying profession by globalization, rapid technological advancement and constantly changing customer needs and requirements. There is equally the need to identify and unlock untapped opportunities for the benefit of our members as well as repositioning the institute for better service delivery.
In response to the above challenges, the institute embarked upon systematic reforms, including system rebranding and adoption of corporate governance principles, both of which are aimed at sustainably delivering value to our esteemed clients and the general public. The rebranding roadmap signposts commitment of our members to deliver services to total customer satisfaction. It will be launched during the forthcoming workshop mentioned above and will receive a substantial boost as we unveil NIQS Brand Ambassadors later in the year. NIQS Brand Ambassadors will be composed of quantity surveyors that excelled in their respective spheres of endeavor such as politics, public administration, business, corporate world, traditional institutions, academia, military/paramilitary and private consultancy.
Introduction of robust stakeholder engagement strategy by this Council ensures that members have a greater say in how the Institute is being managed.
At the industry level, the institute has started reaching out to other professional bodies in the built environment. I led a delegation of NIQS on a visit to the President and Council members of Nigerian Society of Engineers on March 18, 2020. The discussion was frank and fruitful and centered on ensuring collaboration and inclusivity among professionals with a view to moving the construction industry forward. We intend to continue the visitation to other professional bodies as well as critical stakeholders after the Covid-19 Pandemic.
Nigerian government at all levels has traditionally financed the construction of infrastructure project and the like from their fiscal budgets with little or no support from the private sector. With the present economic pressures on the fiscal budget, which approach of project financing can be sustainable?
Infrastructure supports and drives the economic activities of any country. Unfortunately, there exist a wide infrastructure deficit in Nigeria, which is challenged by growing population, rural- urban migration, technological advancement and aging facilities. Financing infrastructure projects from fiscal budgets with little or no support from the private sector is not sustainable. The economic pressure on the budget is becoming acute, occasioned by oil price volatility, rising current expenditure and cost of governance generally. It is therefore appropriate for one to join in the call for government to diversify the economy in order to ensure sustainability in revenue generation.
The government should explore enormous opportunities offered by innovative financing as viable approaches of funding infrastructure. Some viable options include Public Private Partnership (such as build-operate-transfer, build-lease-transfer, design-build-operate- transfer, build-own-operate, build-own-operate-transfer, lease-develop-operate) and borrowing from Pension funds. Road Infrastructure Development and Refurbishment. Investment Tax Credit Scheme was earlier mentioned. The Federal Government’s plan of borrowing N2trillion from the pension fund of N10 trillion as announced in January, 2020 is in the right direction.
However, for Public Private Partnership models to be sustainable, the following issues need to be addressed: Prudent management of completed projects to ensure that enough returns are made to settle debts, particularly economic infrastructure. Secondly, policy and regulatory reliability, consistency, stability and enforceability to engender investors’ confidence. Thirdly, Legal frameworks should be strengthened to offer desired comforts to domestic and foreign investors.
Others are stakeholders engagement – the various stakeholders’ interests that sometimes conflict with each other must be identified, classified and appropriate engagement plan put in place; provision of favourable, conducive and investment friendly environment to the contracting parties to attract and retain investing public and project management team retained for each project should be supported by all stakeholders with a view to ensuring that the project is completed within approved budget, schedule and to specified quality.
There are fears that another recession is looming with the drop in oil revenue and spread of coronavirus, what can be done to stave off recession in the construction industry.
There are strong indications that recession is likely, following the drop in oil prices and partial lockdown of the economy. The construction industry will be under tremendous pressure, because capital projects are the most affected procurement under economic recession.
In our proactive approach to issues of national development, NIQS organized a webinar conference and at the end made far reaching recommendations, such as One: The three tiers of Government need to prioritise their spendings and focus more on procurement and provision of necessary healthcare facilities. The construction aspect of the health care projects will boost activities in the sector to some extent, thereby creating jobs in the Industry.
TWO: Government should encourage companies to increase manufacturing of local materials, including possession of automated production models that can fast-track availability of construction materials and goods, thus filling the void created by lower importation.
THREE:Stimulus should be provided to construction organizations to enable them cushion the effect of the pandemic. This will minimize lay-off rate and reduce negative social- economic impact of the pandemic.
FOUR:Government should through the Central Bank of Nigeria prevail on commercial banks to reduce interest rates for firms in the construction supply value chain. This will make investment within the construction sector more attractive and will boost its activities.
FIVE: Construction firms should optimize off-site assemblage of construction components. This will minimize disruption of remote working and supply chain activities.
SIX: Consultancy practices should consider diversification as a viable strategy to meet the challenges of post Covid-19 recovery. An evolving and important area is the sustainable development and adoption of green building technology. This is the current and viable direction of global practices in the built environment. Corporate firms must explore and maximize the business perspectives of this evolving trend. This will assist in mitigating long-term impacts for the present and upcoming practitioners.
There has been rising spate of building collapse and fire out breaks in many homes, offices and industries in Nigeria. How can we check these incidents? Can we also blame this on the influx of sub-standard building materials into the country?
The frequency of building collapse and fire outbreaks are of great concern to every well- meaning Nigerian. There are substandard materials such as reinforcement bars, cables and so on in the market. The incidences of building collapse and fire outbreaks as a result of substandard materials could however be checked or reduced if only qualified and registered professionals are engaged to handle designs and execution of building projects. Qualified building design professionals always recommend materials that meet national and international standards as well as specifications and will not permit or approve the use of substandard materials in their projects. Building developers should always ensure that only qualified professionals are engaged to handle their projects, to avoid possible monumental losses.
Another measure needed to check building collapse is for government to mete out appropriate sanctions and penalties to whoever found to be involved in sharp practices and unwholesome acts leading to collapse of buildings. On our part as an institute, we do have laid down procedures of sanctioning any of our members found culpable in incidence of building collapse in the country. Development control departments in various States and FCT should ensure that buildings are constructed as designed by professionals and duly approved by them.
Standard Organisation of Nigeria for instance, has a mandate of ensuring that all materials manufactured locally and those imported satisfy minimum requirements. The Federal Fire Service and counterparts at States level also retain the mandate of enforcing compliance of building designs to fire safety code. They also inspect existing buildings for fire risk assessment and confirm their safety status.
No comments yet