Keys to Nigerias Infrastructural development

My Naija peoples, in this post I am talking about Public Private Partnerships (PPPs), a sustainable effort between the public and private sectors, in which each contributes planning and needed resources to accomplish mutual shared objectives. It is plain as the nose on my face that dynamic partnerships between the public and private sector have become the cradle of economic growth and development across the globe. All over the world, PPPs have continued to drive infrastructure development.

Since the 1960s, major capital projects in the developed world have been executed through PPP arrangements. In the past few decades, developed economies such as the United Kingdom have showcased a variety of Public Private Partnerships (PPPs) for the delivery of infrastructure, public utilities and large-scale projects. Emerging markets such as India and South Africa are also recording successes using tried and tested partnerships to create, expand and modernize infrastructure.

Overwhelming evidence indicate that PPPs are relatively cost efficient, foster best practices for sharing and transfer of risk, assure superior value for money, save time, streamline contracts and simplify procurements, facilitate innovation through public-private cohesion, eradicate bureaucratic and political processes, encourage technology transfer all the while delivering infrastructure and services. The World Bank estimates that every 1% of (government) funds invested in infrastructure leads to an equivalent 1% increase in Gross Domestic Product (GDP).

No one can deny the fact that Nigeria’s infrastructure challenge is enormous. The Managing Director of Urban Development Bank of Nigeria (UDBN), Mr. Kunle Oyinloye, last year, said that the nation requires about N32 Trillion for infrastructural development in the next ten years to meet the federal Government’s vision 20-20-20 economic targets.

Unfortunately, Nigeria has not had an encouraging record of investment in infrastructure. Lately however, attention to infrastructure development is gaining momentum. The Central Bank of Nigeria (CBN) recently called for the establishment of a Nigeria Infrastructure Fund where funds could be mobilized and developed to address Nigeria’s huge infrastructural deficit. It also stated that in terms of estimated funding gaps in infrastructure, Nigeria needs to invest $100billion (about N15 trillion) over the next 10 years.

Evidently, the government alone cannot gather together the resources (finance and expertise) to meet this need and the involvement of the private sector is not just desirable, but indispensable. It is no wonder therefore that the majority of infrastructure projects currently underway at both state and federal levels are powered by PPPs.

And opportunities for these types of partnerships abound. The Cross River state (CRS) government for example is seeking investors to develop the agricultural sector as it aims to see the region become a major food producer and exporter. Advantages of investing in Cross Rivers Agribusiness? Export promotion zones, a port, accessibility to Lagos and Abuja. These provide easy links to large markets and encourage faster clearance of goods.

Incentives?

The World Bank Sub-National Doing Business Report for Nigeria ranks CRS as one of the top four states for ease of doing business in Nigeria. The state’s One-stop Investment Center (OSIC) provides investment information, services and advice to potential investors. In addition, the state government is working to provide adequate infrastructure to meet growing consumer and business demands. These include:

• $150-million project to expand and upgrade Margaret Ekpo International Airport.
• Calabar Monorail
• $36-million investment on 19.8km rail connecting international airport, Calabar and TINAPA resort.
• Calabar Energy City, which is designed to develop an energy sector cluster with residential, commercial and industrial areas.
• Power Generation – there is an ongoing project to connect all communities to the national grid. There is also increased focus is also on renewable energy sources.

Akwa Ibom State has large deposits of a number of mineral resources that can be commercially exploited. And in Katsina state, preliminary results of a survey conducted indicates the presence of a large quantity of diamonds in the state.

All I am trying to point out is that opportunities abound for both the government and the private sector to take advantage of, for mutual benefits and for the development of the Nigerian society as a whole. Our slow national development is easily tied to the deficiency of  quality and functional infrastructure. In so many countries around the world including Africa, PPP strategies have been successfully utilized and exploited. Nigeria should not be an exception.

Nigerian Infrastructure Development and the Enterprise Revolution - An African Perspective

Author: peter osalor

The general state of infrastructure across the African continent and especially sub-Saharan Africa is acutely discomfiting. With the exception of South Africa, the continent's largest economy, the entire region is bogged down by severe infrastructure deficits that have frustrated development programmes and marred growth prospects. The Southern African Development Community (SADC) countries have been relatively better off in this regard with their efforts to drive area-wide development through trade agreements, resource pooling and multi-nation collaborations. Western Africa, on the other hand, has been bereft of similar benefits due to complex past and present exigencies. As a result, the economic potential of this region has hardly been scratched.
In June this year, the World Bank approved a $1 billion loan for Nigeria to fund multiple development programmes including expansion and enhancement of the country's massively deficient power sector. An amount of $200 million was earmarked for investment in networking and technical upgrades to improve electric supply. While this concessionary, interest-free funding comes as an undoubtedly welcome development, it amounts but to a tiny fraction of Nigeria's overall investment requirement in infrastructure. In August 2008, the Nigerian Debt Management Office (DMO) revealed that the country needed at least $100 billion in investment to develop four key infrastructure areas - power, rail, roads and oil & gas. The figure was calculated to align with the ambitious national goal of taking Nigeria to the top-20 world economies by 2020. Of the four sectors mentioned, power alone would require an estimated investment of between $18 and $20 billion over the next ten years. With a current installed capacity of 6,000 MW against the total requirement of 10,000 units, only 40% of Nigerians currently have access to electricity.
The collapse of basic infrastructure and social services was set off in the 1980s, after Abuja's unhealthy dependence on oil exports decimated its agriculture and light manufacturing sectors. The static oil economy wiped out traditional and emerging livelihoods, creating rampant unemployment, poverty and degraded living standards. By 2002, per capita income was below the level for 1960, when Nigeria gained independence from British rule. In terms of infrastructure decline, power happens to be the most hardly hit, but the government readily admits severe shortfalls in a many other areas as well. For instance, the rail network is in shambles and today accounts for only 1% of national transportation1. The port service likewise suffers severe bottlenecks and inadequate capacity optimisation. The over 100,000 km long road network is in disrepair at best and barely usable at worst.
Because of Nigeria's strategic location and the abundance of its natural resources, infrastructure development in the country has pan-African relevance. The human capital of 148 million that makes Nigeria the most populous African nation is a workforce of uncharted economic potential. The country's thriving informal sector, estimated to be as high as 75% of the total economy, also conceals tremendous possibilities for inclusive growth. Rapid SME development has hence been the mainstay of successive governments since the reinstatement of civilian rule in 1999. Nigeria's ability to kick-start an enterprise revolution that will fundamentally alter its macroeconomic imbalances remains the quintessential challenge of its 2020 goal.
Infrastructure development is clearly going to be the first building block in this endeavour, and ground realities are pretty harsh as present conditions go. For Nigeria, the larger impact of infrastructure deficits is the high cost of doing business, for large corporations and small enterprises alike. Lawmakers need to draw up a comprehensive blueprint to reverse this trend in a time-bound manner. The following are two key aspects in this consideration:
o The whole of Western African receives very nominal foreign private investment in infrastructure due to a slew of reasons ranging from high foreign exchange risks to low creditworthiness. The region's subdued ability to raise debt and inclination towards infrastructure sectors with limited regulatory intervention are further obstacles. Nigeria needs to lead the way in enhancing access to equity debt as a means of attracting projects with viable private participation.
o The ability of local finance markets to fund infrastructure projects is very low across the continent. Local long-term local financing is almost non-existent except in South Africa, which has been successful in developing an indigenous capital market for consistent funding on convenient terms. The absence of similar capacity in the rest of Africa means most of it is dependent entirely on grants-in-aid and soft loans from international development agencies.
For developing African economies, increasing foreign investment on infrastructure while simultaneously developing avenues for credible local finance is a daunting task. The current Nigerian government under President UM Yar'Adua acknowledges the challenge by listing infrastructure development as a cornerstone component of the 7 Point Agenda for realisation of the 2020 goals as well as the Millennium Development targets. Some recent initiatives in this connection include the setting up of a federal mortgage bank, a housing authority and a national road maintenance agency.
That infrastructure will be the prime driver of all socio-economic development in Africa is given. What remain unclear are the ways and means that individual nations employ, and the ground effectiveness of such measures beyond official statistics and proclamations. Nigeria has the unique opportunity not only to reverse decades of economic stagnation but also to hold up an effective model for accelerated growth to the rest of the continent. The success of its long-term ambition gathers wider significance because it is bound to have a gradual spill-over effect on its immediate geography.
Article Source: http://www.articlesbase.com/economics-articles/nigerian-infrastructure-development-and-the-enterprise-revolution-an-african-perspective-3015339.html
About the Author

Peter Osalor is a multi-skilled director, chairman of trusts, proprietor and consultant. Peter Osalor has been a successful entrepreneur since 1992 when he formed Peter Osalor & Co and which has since grown to a very large client base with a turnover of millions. He is currently a fellow of the Association of Chartered Certified Accountants (ACCA) and the Institute of Chartered Accountants in Nigeria (ICAN). Peter is also a member of the Chartered Tax Advisors and the Chartered Institute of Taxation in Nigeria (CITN).


T2S:
This article was written sometime last year...however it's relevance to our present day society will remain timeless or 'dateless' as long as we continue to suffer from a complete lack of viable infrastructure.


"Growth potential is dependent on the quality of performance of infrastructure to a great extent - a fact the Chinese realised much earlier than us..." (http://www.chillibreeze.com/articles/Infrastructure-Development-and-Economic-Growth.asp)


We need to advocate for infrastructural development as a way towards truly making Nigeria one of the top 20 economies of the world by 2020. More to come...