Tackling Nigeria’s Infrastructural Deficit

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By Adedayo Ojo

If Nigeria does not start walking the talk regarding her infrastructure development, the country may run into a serious crisis in the near future. With a population expected to hit 397 million by 2050, Nigeria’s infrastructure will come under huge pressure, hinder economic development and deny citizens of the much-desired national prosperity except something drastic is done.

For decades, Nigeria failed to develop its infrastructure. It got so bad that in 2015 the country needed N10.63 trillion ($67 billion) to build hospitals and schools, fix the energy sector, and repair bridges and roads. Though the Federal government budgets an average of $5.9 billion to fund infrastructure annually, endemic corruption, nepotism and poor implementation have ensured little progress.

No surprises why the International Monetary Fund (IMF) recently pegs the value of Nigeria’s infrastructure stock at 20-25 per cent of GDP. Compared with the 70 per cent average for developed economies, the reason for Nigeria’s poor global competitiveness despite its stature as Africa’s biggest economy becomes more glaring.

The Federal Government must increase capital expenditure in the national budget. Nigeria’s aggregate expenditure in the national budget has grown annually but capital expenditure has averaged about 25 per cent. In 2008, allocation for capital expenditure was ₦1.2 trillion, representing 37 per cent of the total budget of ₦3.3 trillion.

By 2015, allocation for capital expenditure dropped to a mere 9 per cent (N387 billion) of the proposed aggregate expenditure of N3.6 trillion. One of the present administration’s promises to Nigerians is to incrementally allocate more funds to capital expenditure. This is a good step in the right direction. In 2016, capital expenditure moved to 25 per cent (₦1.6 trillion) of the total budget of ₦6.1 trillion.

In 2017, capital-expenditure increased to 30 per cent (N2.24 trillion) out of the proposed aggregate expenditure of N7.298 trillion. And in 2018, capital expenditure dropped to 28 per cent (N2.428 trillion) out of the proposed aggregate expenditure of N8.612 trillion. If Nigeria must bridge the gap in infrastructure, government must prioritize capital expenditure at least for the next decade.

Nigeria must ensure adequate funds is not only allocated to capital expenditure but also disbursed timely and utilised as budgeted. Time and again, we witness situations whereby allocated funds are either not disbursed to the benefiting agencies or virement is delayed. This is unhealthy. The Federal Government must bridge this fiscal gap. In a country that badly needs to fix infrastructure, misappropriation of public funds must be tackled more vigorously.

Four years ago, it was reported that only 50 per cent of the ₦1.1 trillion budgeted capital expenditure was actually spent due to ratification bottlenecks. Under the present administration, we have also witnessed embarrassing issues such as budget padding. We must change the way we do government business.

Nigeria needs proper planning, which is a critical factor in infrastructure development. Too often, the country experiences hiccups in its development plans, a situation that often result in interruptions. We must develop a mechanism that assures seamless execution of development plans regardless of changes in government.
These hiccups and interruptions have been experienced time and again for decades. Under the Yar’Adua-Jonathan administration for instance, certain infrastructure-development plans of the previous administration were not only interrupted but out rightly abandoned.

A classic example is the present administration’s abandonment of the National Broadband Policy, a five-year strategy purposed to accelerate high speed internet and scale up the nation’s broadband growth to 30 per cent by 2018, leaving in its wake, prompt socio-economic growth for the nation and prosperity for its citizens.
A regime change should not lead to an outright stoppage of viable policies. Government should be a continuum. To avoid the negative effects of these avertable inconsistencies, such as distrust by development partners and investors towards the country’s Public-Private Partnership (PPP) projects, government must check the spate.
This is why the idea of legislating the country’s development plans is laudable; an idea that has been corroborated by former Minister of Budget and Planning, Dr Shamsuddeen Usman at a recent workshop on Review of 2018 Budget Estimates and Analysis.

To guarantee steadiness, these development plans should have fixed and uninterruptible tenure while completing ongoing capital projects should be mandatory for any administration, subject to due process.
Public-Private Partnership (PPP) is the way forward for infrastructure development. Considering the Federal government’s fiscal constraints, PPP is a veritable tool for financing public infrastructure. With over 120 trillion dollars in their kitties, banks and institutional investors are healthy partners in this regard.
To encourage PPP, government should consider developing a 4-point approach by (1) identifying critical but crumbling infrastructure across the nation; (2) coordinating the activities of public agencies involved in capital projects in an efficient and effective manner to ensure efficiency, speed, and transparency; (3) ensuring that only qualified contractors with pedigree are involved in public-infrastructure projects; and (4) liaising with other public agencies and regulators – such as tax authorities for instance – to ensure that the legitimate expectations of development partners and other parties involved in the PPP are met.

No thanks to poor coordination, we have had many situations where parties in a PPP arrangement have had to turn to our courts to enforce contractual promises. If we don’t fix this, we can’t effectively fix our huge infrastructural deficit.

In conclusion, Foreign Direct Investment (FDI) will significantly benefit Nigeria’s infrastructure-development drive. Power, technology, and transportation infrastructure for instance can greatly benefit from FDI. With Nigeria now out of recession, FDI inflow has improved significantly.

In December 2017, Nigeria re-emerged preferred destination for FDI in Africa. Three months before then, the World Bank released its Doing Business that rated Nigeria 145th best place to do business in the world, having moved up 24 places. As Nigeria begins to rewrite its story, the Federal Government must harness the opportunities this brings, using FDI to significantly boost Nigeria’s infrastructure.
We can no longer afford to neglect or play politics with our infrastructural deficit.

* Ojo, the CEO of Caritas Communications, with offices in Nigeria and Ghana, writes from Lagos