Executive Order 007

•This is good in the short run. But it needs legal backing to outlive the government

ALTHOUGH long anticipated, President Muhammadu Buhari on January 25 signed Executive Order 007 on Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme. The order, as the name suggests, will allow private companies to build federal roads in exchange for tax credits.

With six investors already assigned to 19 federal roads in 11 states in a pilot scheme under the direction of a-13 man committee headed by Minister of Finance, Zainab Ahmed, its coming might well be seen as mere formality. Yet, the development is significant in a number of ways. First, it gives concrete recognition to the on-going roles of the private sector in road development. Second, it underlies the acknowledgment by the government in particular, that the existing mechanism for funding road development has not only become inadequate but clearly anachronistic.

Third, together with the activities of the Infrastructure Concession Regulatory Commission (ICRC), the Federal Government agency charged with the development and implementation of public private partnership framework in the provision of infrastructure services, they offer potential boosts to current efforts to bridge the infrastructure gap, and with it a fair chance that the crippling deficit in the sector might begin to be addressed. Fourth, it affords a new lever through which corporate entities can better integrate their corporate social responsibility projects into national priority projects. And finally, for the communities served by the projects, it reduces the perennial accusations of neglect or alienation by the corporate entities.

We welcome the initiative if only for all of these and for being a part of a multi-pronged mechanism for addressing the infrastructure challenge. Only last year, the economic and financial research firm, Financial Derivatives Company, put the annual outlay required to turn the infrastructure tide at $15bn (N4.59tn) annually for the next 15 years. Meanwhile, the entire capital provision in Budget 2018 was N2.87 trillion of which only N820.57 billion had been released as at December 14, 2018. As for the year’s budget still under consideration, the Federal Government has proposed N2.031 trillion, a figure less than the preceding year. These figures do not even factor in the billions lost through corruption and other inefficiencies in the bureaucratic chain.

To the extent that the initiative allows those private entities to plough their taxes directly into projects with immediate benefits to the people, it is welcome, moreover at a time like this.

We admit also that there are limitations to what an executive order can achieve, more so in the long run. Aside not being a substitute for a proper legislation, and so could be scrapped by a mere proclamation by a succeeding administration, the range of its application and effectiveness is also limited. A proper legislation in the circumstance would have been far more preferable to what amounts in reality to a legislative by-pass. The Federal Government might therefore consider sending a bill to the National Assembly for this purpose as soon as practicable.

More seriously however is its operability in an environment where standards are not only appalling but the mechanisms for enforcing them are either too weak or non-existent. It is after all, a notorious fact, that a good number of our crater-infested highways were products of criminal negligence right from design stages to execution and supervision.  Where are the guarantees that those roads under the tax credit initiative will meet the prescribed standards, particularly in an atmosphere where corruption and poor engineering workmanship are rife?

Considering that the construction time can be quite long and that the sunk costs would be amortised over time via tax credits, how will issues of inflation and cost overrun from unexpected delays come to play? We expect the government to pay close attention to these and other related issues if only for the fact that the route is still largely an uncharted one.