By Kenneth Jukpor & Yusuf Odejobi
In a bid to bridge the nation’s growing infrastructural deficit, President Muhammadu Buhari last week approved the establishment of a Public-Private Partnership (PPP) Infrastructure company known as “Infra-Co”.
According to the Presidency, Infra-co would wholly focus on critical infrastructure to drive investments into Nigeria, finance public assets rehabilitation and reconstruction and help facilitate the development of critical infrastructures like roads, rail, power and other key sectors across the nation.
The infrastructure company is being developed with conceptual designs from the National Economic Council (NEC) and the Central Bank of Nigeria (CBN) and it is expected to get its initial seed funding of N1 trillion from CBN, Nigeria Sovereign Investment Authority (NSIA), Pension Funds, African Finance Corporation (AFC), and local and foreign private sector development financiers.
While the goal is to see the seed capital grow to N15 trillion in assets and capital over time, if well managed the company could be able to issue bonds to meet key critical financing needs and go into the capital market to raise money.
Buhari noted that the board of the Infra-Co will be chaired by the CBN Governor, while the board will include the Managing Director of NSIA; President of AFC, representatives of Nigerian Governors Forum and Ministry of Finance, and three independent directors from the private sector.
According to the International Monetary Fund (IMF), Nigeria’s infrastructure stock of 25% of GDP remains far below the 70% international benchmark.
Over time Nigerian citizens have clamoured for the construction of physical and social infrastructure across the nation, especially on roads, power, housing and ports. The shambolic maintenance of dilapidated infrastructure has also caused untold impediments on business operations, loss of lives and properties and also limiting foreign direct investment into the nation.
The move to establish Infra-Co has also raised some eyebrows among transport experts who believe that the functions of the agency could be domiciled in the Infrastructure Concession Regulatory Commission (ICRC) or the Bureau of Public Enterprises (BPE).
Nigeria’s budget over the years has continued to rely on domestic and external borrowings to finance capital projects and solve infrastructural challenges. With the nation’s debt service rising every year, borrowing appears unsustainable coupled with the government’s inability to self-finance infrastructure projects hence the need to tap into the private sector to bridge that gap in infrastructure deficit.
While Infra-Co could be seen as the federal government exploring innovative ways to rekindle the economy from recession, inflation and COVID -19 challenges in lockdown, there are also concerns that this establishment may become another conduit pipe to embezzle Nigeria’s scarce resources.
Through borrowing, the President Buhari administration has invested in railway, bridges and roads construction and re-construction across the nation which are considered key infrastructure needed to kick start the nation’s economy, woo investors to stimulate economic recovery and growth.
Recall that in December 2020, at a webinar organized by the Bureau of Public Enterprises (BPE), the Vice President’s spokesman, Laolu Akande, quoted the Vice President as saying that the country needs $3trillion to bridge infrastructural deficit over the next 30 years.
He further said that in spite of the government’s interventions over the years, Nigeria still faces a huge infrastructural deficit which is constraining rapid economic growth hence the deficit can only be made up by private investment.
With Infra-Co, it is expected at the long run to increase national economic productivity and infrastructural growth across all sectors of the economy couple with previous policies that enables PPP participation like the Road Trust Fund (RTF) that was signed in 2017 and the Executive Order 007 in 2019 on Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme.
Construction of Bodo-Bonny Highway Bridge and Road by Nigeria Liquefied Natural Gas (NLNG), reconstruction of Apapa-Oshodi-Oworonshoki Expressway by Dangote, reconstruction and rehabilitation of Port Harcourt-Maiduguri Eastern Narrow Gauge, construction ofPort Harcourt Industrial park and Bonny Deep Seaport in Rivers State are few examples of recent PPP projects.
Speaking with MMS Plus newspaper, the Director General of Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf described the establishment of Infra-Co as a good idea at this critical stage of the nation.
He also emphasized on the need to bring in the private sector on board to support infrastructural building, stressing that the government doesn’t have the resources to fully fund infrastructure projects.
“What is important is to have the right kind of framework that will truly encourage and inspire the confidence of the private sector in the process. Framework around the realization of whatever project they choose to do, framework around risk sharing and management, sanctity of contract and agreement and all factors that normally present risk to PPP project. So, it is important that the entire framework is in place. It is not only about money, it’s also about confidence building in investors either local or foreign in the process.” Muda said.
He further said that Infrastructure Concession Regulatory Commission (ICRC) and Infra-Co should complement each other as ICRC is involved in concessioning of PPP projects like government firms and assets and also serves as a regulatory agency for PPP transactions with powers to inspect, supervise and monitor projects and processes in order to ensure compliance with relevant laws, policies and regulations.
Also speaking, an expert in the transportation sector, Dr. Ejem Ejem, stressed that transportation is very important to Nigeria’s economic growth and any bid to boost infrastructure should be welcomed.
Ejem, who is a lecturer at Federal University of Technology Owerri (FUTO), posited that Infra-Co could be a mechanism in place to sustain existing infrastructure in the country and achieve new ones.
Speaking on the dilapidated state of most roads in the country, he explained that the incessant damages done on the roads aside errors made in construction are usually results of truck overload on those roads.
His words: “There should be models across all the infrastructural assets to check excesses or the misuse of infrastructures. Instead of criminalizing overload in Nigeria we should start commercializing it. What do I mean by that, instead of penalizing someone for overloading we can devise a means by calculating the excess load he’s carrying and such a person will pay for it.”
“Already we have some models we’re developing for calculating that, the money generated from that can be used for maintenance of the infrastructure. By the time we start building funds from such incentives we will be able to raise capital to sustain such infrastructure. That’s the way it is done in other parts of the world. They are not looking at criminalization of certain abuses instead they commercialize it.”
Meanwhile, the President Women’s International Shipping and Trading Association Niger (WISTA, Mrs. Eunice Ezeooke, pointed out that the government needs to be clear on which area they’re looking at in infrastructural development.
Noting that infrastructure could be described as ‘vague’, she said: “We even have Entrepreneurship Infrastructure which refers to capacity building. There is a need to be clear about this Infra-Co. If it’s addressing maritime infrastructure we will be talking about deep seaports. There is also rail infrastructure, roads, aviation, power, among others.”
Speaking on the African Continental Free Trade Area (AfCFTA) agreement, she stressed that there were infrastructural challenges that could mar the arrangement.
Ezeoke said; “The goal of AfCFTA is to remove trade barriers by promoting one African trade, but where are the vessels? If we want to buy the vessels, what type of vessels are we buying? We must also consider our population and the diversity of our economy so we don’t need to limit ourselves to just oil vessels. Besides getting tanker vessels, we need general cargo vessels for agricultural products because we’re promoting agriculture and flat-bottom vessels for containers because we have to export. These are the areas we need to look at.”
She maintained that the core reason Apapa and Tin Can ports access gridlock hasn’t been solved is that both ports expired over 40 years ago.
“Until we start developing new deep seaports we cannot solve the gridlock in Apapa. Every port at construction has lifespan and normally this is between 50 and 80 years. Apapa port is over 120years, Port Harcourt port was 100 years old in 2013. In developed countries when a port is nearing the end of its lifespan, usually 20 years to that time they begin construction of a new one because population is growing. Nigeria was less than 50 million in population when Apapa port was built and we’re more than 200 million now, but we’re still using the same port without new roads leading to the port,” she added.
Leveraging on private sector participation in bridging the gaps infrastructure deficit is a step in the right direction. Nevertheless, there are still certain factors that remain unaddressed. There is also a school of thought that describes Infra-Co as a money spinning venture ahead of the 2023 general elections in Nigeria.
Infra-Co is like a new born baby or a yet to be conceived baby. This baby may be ill-conceived, it may be figment of some highly placed political bigwigs for pecuniary reasons. The emergence of this baby may be a mistake by those who conceptualized it. Nevertheless, like every human-being on earth after its arrival the destiny of Infra-Co will be solely determined by it.
Given the right framework, this sparsely defined agency could birth a new era of effective implementation of infrastructural projects at appropriate budgetary costs and sited in the most profitable locations for the country.
Will Infra-Co be a crucial agency to reposition Nigeria or will it be a negation of President Buhari’s acclaimed frugal disposition for covert reasons?
