The Nation Newspaper

Tag: infrastructure

  • Weighing the options for infrastructure financing

    Weighing the options for infrastructure financing

    To reduce the $300 billion infrastructure deficit and unlock the real sector’s potential to reflate the economy, Nigeria needs about $25billion yearly, according to experts. But the government’s attempts to find the cash to build infrastructure through external borrowing or the N6 trillion pension funds, among other options, are embroiled in controversies, provoking fears that some projects will either be delayed or abandoned them. This has cast doubts over the sector’s capacity to haul the economy out of recession. Assistant Editor CHIKODI OKEREOCHA reports.

    Vice President Yemi Osinbajo has never stopped declaring his confidence that the economy would bounce back. At local and international fora, he spoke of the Buhari administration’s commitment to pulling the economy out of recession, hinging his optimism on massive investment in infrastructure.

    For instance, at the World Economic Forum in Davos, Switzerland, Osinbajo said: ‘’The Muhammadu Buhari administration is committed to investing more in infrastructure than in previous times by ensuring that 30 per cent of the budget goes into capital expenditure”.

    The vice-president, who chairs the Economic Management Team (EMT), said the government was working on how to tap into the N6 trillion pension fund to finance infrastructure development. He added that there was a need to de-risk such financing models for infrastructure.

    However, his belief that the economy would rebound appears to vary with the anxiety among operators in various sectors, particularly the real sector.

    Operators in the real sector, which comprises manufacturing and agriculture, are apprehensive of delays or abandonment of infrastructure projects planned for this year, following the controversies over various government’s infrastructure financing options.

    Last December President Buhari presented this year budget of N7.3 trillion to a joint session of the National Assembly. Christened “Budget of Recovery and Growth”, he said on expenditure, the government proposed a budget of N7.298 trillion, a nominal 20.4 per cent increase over last year’s estimates.

    According to him, 30.7 per cent of the expenditure will be capital in line with the government’s determination to reflate and get the economy out of the woods as quickly as possible.

    The fiscal plan, he also said, would result in a deficit of N2.36 trillion for the year, which is about 2.18 per cent of GDP.  The deficit, he said, would be financed mainly by borrowing, which is projected to be about N2.32 trillion.

    However, despite the 30 per cent allocation to capital expenditure, the Federal Government appears to be at the crossroads on how to generate enough revenue to meet its obligations, especially capital projects.

    This is so because its attempts to turn to international financial institutions for loans to finance critical projects have been rebuffed by those critical of the administration’s economic policies.

    Last October, Buhari requested the National Assembly to okay a foreign loan of $29.9 billion to execute key projects across the country. But the request died on arrival. It was thrown out by the Senate for lacking a borrowing plan.

    The move also did not go down well with experts and Nigerians. Many of them kicked, insisting that borrowing would do the country more harm than good. Renowned economist and industrialist Henry Boyo was one of them. He said the $29.9 billion loan would affect Nigeria.

    Boyo noted that though there was nothing wrong in borrowing to improve social welfare and infrastructure, it was improper for the government to borrow when it owed so much that it was using about 40 per cent or more of its real income to service debts.

    The economist also expressed concern over the government’s plan to borrow to build infrastructure given that the government-funded infrastructure had never been well managed.

    He said with the sad record of poor performance of government agencies and institutions, it was worrisome for anybody to suggest borrowing to create more infrastructure that would be managed by government.

    Human rights lawyer Mr. Femi Falana (SAN) cautioned the government against taking the loan. Rather than go aborrowing, he called on the government to adopt an “aggressive policy” to recover looted funds.

    Insisting that the government’s request for loans would be detrimental to the country’s future, he said there was a need to fight those who stole Nigeria’s money.

    The Chairman, Senate Committee on Land Transport, Gbenga Ashafa, agreed with him. While urging Buhari to fund the 2017 budget deficit with recovered fund by the anti-graft agency, he appealed to the government to ensure 100 per cent funding of infrastructure.

    Such appositions may have put the government on the spot over how to close the nation’s huge infrastructure deficit, which, according to the African Development Bank (AfDB), is estimated at $300 billion. The Minister of Finance, Mrs. Kemi Adeosun, said about $25 billion is needed yearly to meet the country’s infrastructure deficit.

     

    Row over use of pension funds

    Apart from borrowing, the Federal Government is also considering turning to the nation’s pension funds to building infrastructure. The Nation learnt that as at last November, the fund had risen to a staggering N6.02 trillion.

    With the National Pension Commission (PenCom) projecting that the country’s total pension asset may hit N20 trillion by 2020, it is surprising that the government, according to Osinbajo, was working on how to tap into this huge fund to finance infrastructure development.

    Again, this option appears not to be enjoying a smooth sail. For instance, the Trade Union Congress of Nigeria (TUC) condemned comments by some federal lawmakers that the accumulated pension funds should be deployed for infrastructure development.

    TUC President Comrade Bobboi Kaigama said the pension scheme was informed by the need to tackle the difficulties being faced by retirees and not to raise money for any infrastructure or investment being pushed by the rich.

    He argued that infrastructural development remains the duty of the government and that it is a key driver and a critical enabler of sustainable growth all over the world. According to him, it provides a unique avenue for the public and private sectors of the economy to thrive. It is also critical in attracting foreign investors.

    Kaigama said rather than appropriating the monies saved from workers’ contributions to perform the government’s responsibility to fix roads, provide electricity and other social infrastructure, the funds should be utilised in projects that are of direct benefit to the retirees and other workers, such as fixing the housing deficit.

    He said this must be done with rules for proper accountability in place.

    Perhaps, to douse the tension over whether or not the government should fall back on the pension fund, PenCom Director-General Mrs. Chinelo Anohu-Amazu clarified that there was need for the government to provide adequate guarantees to secure investment of the fund in infrastructure.

    Speaking at the African Pension Awards, organised as part of activities marking the 2016 World Pension Summit, she said while the Commission was not opposed to the idea of deploying the pension fund for infrastructure, adequate mechanism must be put in place to ensure its safety.

    Mrs Anohu-Amazu, however, explained that pension funds alone would not address the infrastructure needs of the country, adding that other sources of funding, such as Public-Private Partnership (PPP) arrangements, should be explored.

     

    Govt sticks to its gun, despite opposition

    Despite the opposition against taking the loan, the Federal Government has refused to budge, insisting that it has no choice, but to borrow.

    The Minister of Finance, Mrs. Kemi Adeosun, said the government’s inability to generate enough revenue to meet its obligations had left it with no choice than to turn to international financial institutions for loans to finance critical infrastructure projects.

    According to her, the government has a huge monthly personnel expenditure of about N210 billion, with more debt service burden of N120 billion. This, she said, translates to a total of N330 billion monthly.

    Adeosun said it had, therefore, become difficult with the low receipts from oil to generate enough revenue to meet these obligations as well as fund capital projects. She insisted that realities on the ground made it imperative for the country to get the loan, if it must survive the economic crisis.

    While pointing out that it would be futile to wait for oil price to rebound, as the prediction is that it will not go back to $110 per barrel soon, the Minister said Nigeria has no choice but to look for low-cost funds and put infrastructure in place, “because it is the infrastructure that will unlock the economy”.

    The Minister has an ally in Dr. Alaba Olusemore, an economist, who said the $29.9 billion external loan being sought by Buhari would help stimulate the economy and also create jobs. Olusemore, a Managing Consultant, Nesbet Consulting, a Lagos-based firm of management and finance consultancy, said he expects the Green Chamber to okay the loan once the executive furnishes it with the loan’s  breakdown.

    “I expect the Senators to approve the loan request as soon as President Buhari resubmits it with the necessary documents and borrowing plan, because at a time like this when the economy is in a recession, there is need for a stimulus to execute capital projects and create employments,” Olusemore told The Nation,

    The loan management expert and Fellow, Chartered Institute of Bankers of Nigeria (CIBN), said: “Capital projects are not divisible. You need a bulk sum to finance capital projects”. Besides, capital projects, he said, are easier to monitor than recurrent expenditures since the multilateral development agency advancing the loan do on-sight and off-sight monitoring to ensure such loan is applied for intended purposes.’’

    Pointing out that multilateral development agencies have affiliates in the country to monitor the deployment of loans for capital projects, Olusemore said there was no cause for alarm over perceived fear that the loan may not be properly applied or misapplied.

    He said because of its anti-corruption drive, the Buhari administration has put itself on self-censorship, which ensures that funds, whether corporate credit or sovereign loans are not diverted but deployed for intended purposes.

     

    Real sector operators fret

    The vice president’s confidence over prospects of salvaging the economy through aggressive investment in infrastructure gladdened many real sector operators. Their hope was that their productivity, competitiveness and profitability, which have been eroded by dearth of infrastructure, would receive a major boost this year.

    However, with the stalemate over how to fund infrastructure projects, operators are at a loss over how the expected boost in their productivity would come. Some of them who spoke with The Nation, said the hope of riding on the sector’s back to pull the economy out of recession might not be realised, if infrastructure projects are delayed or abandoned.

    For instance, the former Director-General, Nigeria Textile Manufacturers Association (NTMAN), Mr. Jayeola Olarenwaju, said infrastructure deficit,particularly poor electricity supply remained one of the stumbling blocks to the country’s road to economic growth and development.

    He said improving power supply and addressing other infrastructure challenges was holding the sector down. He lsited these problems as poor road and rail network, lack of portable drinking water, and affordable housing.

    He said funding options remained the only way to unlock the sector’s productivity, improve business competitiveness and create employments.

  • ‘Lack of monitoring, infrastructure hurting ‘Buy Nigeria Campaign’

    The Federal Government’s renewed push to encourage locally produced goods and services patronage is a step in the right direction, but failure to complement the campaign with adequate monitoring and supportive infrastructure remains an impediment, former Nigerian Textile Manufacturers Association Director-General, Mr. Jayeola Olarewaju, who spoke with The Nation has said.

    According to him, the campaign has the capacity to galvanise the manufacturing sector and, ultimately, stimulate economic growth and development while creating jobs.

    He, however, expressed regrets that the government had not done much in effective monitoring of the campaign and provision of critical infrastructure.

    “Encouraging patronage of locally produced goods and services is a sure way to incentivise manufacturing, but I am not sure the government is doing enough in the area of monitoring to ensure compliance,” he said.

    Olarewaju said apart from the military that demonstrated the commitment to the ‘Buy Nigeria campaign’, through the purchase of military boots made in Aba, the government had not been able to monitor other Ministries, Departments and Agencies  (MDAs) to ensure that they patronise indigenous goods and services.

    He also said the government had not done much to close the nation’s huge infrastructure deficit, particularly power, which has been a pain in the neck of operators in various sectors of the economy.

    He said, for instance, the provision of steady and reliable electricity as well as good roads and rail would go a long way to encourage local production.

    Though not new, the Federal Government at the 22nd Nigeria Economic Summit (NES) held in October last year in Abuja with the theme: “Made in Nigeria”, renewed the initiative as a way of revitalising the manufacturing sector and boosting its competitiveness. It also envisaged that consuming locally manufactured products and services would significantly reduce the pressure on Foreign Exchange (forex).

    Besides, the initiative, according to its promoters, would help reinvigorate moribund industries, which would in turn, help fasttrack the ongoing economic diversification agenda, promote the Federal Government’s Backward Integration Policy (BIP) and boost non-oil exports. Ultimately, he said, this would help pull the economy out of recession.

    But Olarewaju observed that despite the campaigns’ good intentions, monitoring and infrastructure stand in the way.

    He said for the initiative to make the desired impact, the government must match words with action by providing supportive infrastructure for local production and monitoring its agencies to ensure compliance with the Buy Nigeria Campaign.

  • ‘Declare state of emergence in infrastructure’

    Stakeholders consisting of university lecturers, captains of industry and government functionaries have called for the declaration of a state of emergence in the Infrastructural sector.

    They decried the dilapidated condition of the nation’s critical infrastructure which they said was as appalling, unsatisfactory and lacking maintenance.

    The stakeholders spoke yesterday at a workshop, titled: Sustainable Development of Critical Infrastructure for Nigeria: Challenges and Opportunities.

    They said the country had a huge infrastructural gap while existing ones were not properly maintained.

    The stakeholders spent over six hours brainstorming on solutions to the country’s infrastructural challenges.

    The workshop was organised by the University of Cambridge in partnership with the Bayelsa State-owned Niger Delta University (NDU).

    The participants, who spoke at the NDU’s Conference Hall in Amassoma, said the poor state of infrastructure needed urgent attention because of their importance to the economy, national growth and development.

    The Director of Public Procurement Research Centre at the Federal University of Technology (FUTO) in Owerri, Imo State capital, Prof. Gloria Chukwudebe, noted that Nigeria’s infrastructure was insufficient while the available ones were not properly maintained.

    She blamed the problem on control mechanisms by relevant authorities to ensure sustainable development of critical infrastructure.

  • N529b vote for infrastructure inadequate, says NIESV

    N529b vote for infrastructure inadequate, says NIESV

    The N529 billion allocated to Power, Works & Housing in the 2017 Budget is not enough, Nigeria Institution of Estate Surveyors &Valuers (NIESV) President Bolarinde Patunola-Ajayi has said.

    He told The Nation that the allocation is a drop in the ocean, if any development is to be achieved in the sector.

    He said to produce one megawatt of electricity costs almost N1 billion. “If the government put money into infrastructure provision, it will benefit a lot of people from the professionals to artisans, vendors, manufacturers and traders.

    ‘’It will affect the whole gamut of the economy and stimulate the economy as farmers would be able to bring in their produce from the hinterland and businesses can flourish because people will be able to move around to transact their businesses,” Dr.  Patunola-Ajayi said.

    The NIESV chief regretted that the government did not involve professionals in the built environment sector in budgeting for infrastructure and skill upscale.

    He queried the number and types of houses that the budget provided for, saying this was for lack of reliable statistics for housing gaps.

    He asked: “What type of house is the government going to provide? Is it for the young people, young graduates, middle class, poor or the upper class? The truth is that the government has not shown sufficient commitment to infrastructural upgrade, housing provision and good and motorable roads.”

    He also criticised the situation where the government preferred to give jobs to foreigners as against local professionals insisting that the indigenous professionals can only grow and upscale their skill through continuous patronage by government.

    NIESV Chairman, Lagos State, Mr. Offiong Ukpong said he does not believe the government can implement the budget successfully no matter how much is budgeted for the sector.

    He criticised the government for its neglect of estate surveyors and valuers, noting that the sector cannot move forward if the trend continued.

    He reiterated NIESV call for the creation of the office of the Valuer-General.

    He argued that the government would value its asset yearly as it is done in advanced countries, adding that the issue of corruption that arises each time public assets were being sold off would be addressed as politicians and other money bags will no longer be able to buy up the assets at cheap prices.

    He stressed that the Code of Conduct Bureau will never be efficient without the input of estate surveyors who are trained on valuation, insisting that no other professional body is qualified to do this other than the NIESV.

  • Media and Ikpeazu’s infrastructure revolution

    Media and Ikpeazu’s infrastructure revolution

    SIR: No project presently demands the deployment of the ancillary roles of the press more than the infrastructure revolution of Governor Okezie Ikpeazu of Abia State. Ikpeazu has kept to his promise of using the dry season window to fix the dilapidated Faulks Road. It will be recalled that Ikpeazu had earlier flagged off the reconstruction of 4.7km Faulks Road with a contract sum of N6.8 billion. This approach was to provide a permanent solution to the strategic road which has defied efforts by the previous government due to the menace of flood.

    Ifeobara basin, an artificial lake, collects run off storm water from most part of Aba, especially the Ariaria area. The basin is usually filled with domestic waste, debris, silts and sediments which impede the underground drains to discharge water whenever there is heavy rain because they are blocked. Recovering and desilting the basin is strategic to a successful reconstruction of Faulks Road. It has been severally posited in the past that the past administrations failed in their bid to fix Faulks Road because proper attention was never given to Ifeobara basin. Also, Ifeobara is a major contributor to the problems Ukwi- Mango and the flood water along Faulks. Therefore, complementing the road reconstruction with 5.6km underground water channel would proffer a lasting solution to the lingering problems of both Ukwu-Mango and the flood water along Faulks Road.

    Faulks Road is very strategic to the commercial life of Aba, the commercial- nerve of Abia State and indeed, the South-east. The road begins from Brass Junction by Aba-Owerri Road through Ukwu-Mango to Aba-Port Harcourt Expressway. It also serves a major link to Ariaria International Market. Ariaria International Market which was established in the 1970s, is arguably is the largest market East of the Niger. The market cuts across three local government areas of Aba North, Aba South and Osisioma, and countries of West and Central Africa such as Cameroun and Gabon are served by the market. The market is the largest shoemaking cluster in Africa with 85 zones.

    The media is expected to go beyond the surface of Ikpeazu government’s policies and programmes to explain, where necessary ask questions, to ensure that the public’s support is mobilised for such policies and programmes.

    The mass media are both agenda setters and opinion moulders. They have enormous role to play in Ikpeazu’s infrastructure revolution in Abia State.

     

    • Okechukwu Keshi Ukegbu,

    keshiafrica@gmail.com

  • ‘We need infrastructure to drive tourism’

    ‘We need infrastructure to drive tourism’

    Ini Akpabio is an entrepreneur who has invested hugely in the tourism sector.  He is also a hotelier whose Manet Group of Companies has helped to power the Nigerian economy.  In this interview with Edozie Udeze, he harps on the urgent need for government to revive broken down infrastructure in order to empower tourism and attract investors to the country. Excerpts.

    In this time of deep economic recession, a lot of experts and business entrepreneurs have been working round the clock to see how Nigeria can expand its sources of revenue.  In this regard, the tourism and culture sector have been taunted to be the next option to oil as a source of revenue for the country.  One man who has persistently advocated for this paradigm shift for a long time is Ini Akpabio.

    Akpabio is a well-known entrepreneur, a hotelier, who is into food services, hospitality and sorts.  Based in Abuja where he runs the Manet Group of Companies, he believes that this period of economic recession is not really a moment for business enterprises and tour operators to lose hope completely.  “First and foremost, the developed nations of the world are known to be the most advanced in terms of tourism.  Why I am starting from this point is that tourism generally is like a way of life.  A place that has developed its tourism potentials is a place that has a charging economy.  This includes good infrastructure, and in all ramifications has developmental issues that help to power tourism.  When this is done and tourism issues become quite in place and attractive, of course, tourists will always come.  This has nothing to do with recession or not.  For whether we like it or not, those who have the means will always look for places to relax, spend their money, have fun and see new ideas and discover fresh areas of interest.”

    For Akpabio who has invested heavily in the hospitality industry and whose love for the growth of the sector is indescribable, “when all aspects of the tourism sector are down, what do you expect? The health sector is low; there are no roads to get to tourism sites in the country; the security of tourists and even Nigerian cannot be guaranteed, then how can the sector effectively serve as an alternative to oil?  There have to be energy and power.  Government owes it to the people to refurbish broken down infrastructure in different aspects of the national economy for there to be new lease of life for tourism.”

    In a place where agriculture is down, industrialisation is not encouraging, to say the least, it is near impossible for the economy to thrive.  He said, “Inversely, if these sectors are thriving, tourism itself will thrive.  This is so because all these are tied to tourism.  In fact, tourism is like a person inviting people to his house.  He must ensure that the house is comfortable.  It has electricity, because the occasion may extend into the night.  He must make sure he has adequate chairs to accommodate his quests.  He should also have medical support in case someone takes ill.  Then when these are properly in place, you’re really prepared for tourism.  Therefore, to reflect our economy, Nigeria needs to go back to foundation.  Indeed, we need to restart with clear sanity.  Let us have a vision; vision drives the process.  Without this defined vision to know where we are going, we will not get there.”

    Akpabio clearly defined this vision to include a broad proclamation by the president.  This proclamation has to hinge on the fact that it is now time to make Nigeria a better economy.  “Yes, this has to come from the leader of the country.  Yes, we should turn Nigeria into a tourist destination.  We have all it takes to do so.  And no one can do it for us.  It takes a serious government to go into serious infrastructural strides to attract people into our economy.  Now, we can go back to our hospitals.  There is what is called medical tourism.  Now we can turn them around for good.  When this is accomplished, we can encourage people to come and use our hospitals.  And so it is in all other segments of the sector.  No one ever goes to where social infrastructures are moribund when he has much better alternatives world-over.”

    Government has been harping on the development of this sector considered to be a goldmine.  Yet, it has been all talk and no action.  In Italy alone, for instance, there are about 51 UNESCO – designated tourism sites.  Now Nigeria has only two.  Even the two have not been properly upgraded.  Where tourists look for places with variety of sites to savour Nigeria is not considered.  Yet, there are many natural sites that are wallowing in object neglect all over the country.   These are gifts bestowed on the people by God.  These are domiciled in these communities with abundance of beauties waiting to be explored.  This is why Akpabio is piqued that Nigeria is in the midst of a river, but washes its hands with spittle.  “See, people from the riverine areas of the country are good swimmers.  They are even better than the ones we see at the Olympics.  Now, why don’t we retrain and streamline them?  This is also a source of tourism.  We have that in abundance here in Nigeria.

    “When the nation has plenty of sports tourism in certain areas, then state governments can go back to all the stadia in Nigeria to see how to re-infuse life into them.  This will reflect in our economy.  Thereafter, we will go to the transport sector and rework it for viability.  The railways have to be updated to meet modern standards.  This is what tourism is all about.   It is not a mere gimmick or empty promises or big talks without proper actions.  If we have people in the country, we need transport to move them around.  Do you know that the roads are bad and the transport system is in shambles?  How do you fly a tourist from Abuja to Calabar, for instance, when they keep cancelling and postponing or even delaying flights? Do we have reliable domestic airlines for an effective tourism sector?  All these have to be looked into with the urgency that they deserve.”

    In other words, if the proper things are in their proper perceptives, tourism drives the process; tourism drives the vision.  “You can’t be expecting visitors in your house and be naked or be in your pajamas.  No, it is not proper.  The country has to go through eco-tourism, medical-tourism, sports-tourism, and so on, to make the system work.  This is why we’ve been saying let our people sit up.  Let government do what it should do to recharge the economy.  “When we look at India, we can see that they have very seriously factored medical-tourism into their system.  They have used it to attract the world and boost their economy.  Nigeria has even more potentials.  When Abuja was conceptualised as a conference city, what is the definition of a conference city?  Government should have built world-class exhibition and conference centres to compliment this status given to Abuja.  But those things are not there.  And how do you, then, attract world-class tourists to the city?”

    Akpabio argued that Nigeria can also build artificial towers and monuments to embellish its tourist base.  “Most countries of the world do it.  In Chicago, USA, where I go every year, they have hospitality exhibition.  They have very large exhibition halls where this is done every year.  The hall has capacity for more than twenty thousand people.  In fact, its capacity is more than the Eagle Square in Abuja.  It is so massive and whenever the exhibition is on, the hotels in Chicago cannot cope.  You book ahead and once your moment is over, you are asked to check out to create space for others.

    “This is the sort of thing we need to have here”, Akpabio explained, saying, “we can also create our own artificial centres of attraction to keep people interested in our own massive exhibition halls so that we can attract people from West Africa, from all over the world and it will become our own tourism identity”, he said, with professional gusto.

  • Deciphering the value of infrastructure loan

    Great value was lost in the skewed reportage of the keynote address delivered by Mohammad Sanusi, Emir of Kano in Abuja on December 2.  Emir Sanusi, the Federal Government and Nigerians were ill-served by the media’s embellishing of a fiscal element of the address. Sanusi observed that Nigeria is heavily enmeshed in debts that “out of every one Naira Nigeria makes, 40 kobo goes to debt and 60 kobo is left for salaries, health, education, power and infrastructure.”  Proclaiming that Nigeria should borrow more in order to dig itself out of the present debt peonage seems counterintuitive. Yet such argument gains validity, if such borrowing is per se, for development. The redeeming caveat is ensuring “beyond financing established infrastructural needs…that aggregate expenditure is of such quantum and composition to enable exit from recession.”

    The proposed $30 billion loan is tailored mainly to social infrastructure. It’s safe to assume implicit correlation between the $30billion infrastructural development loan and reported plans to offer N20 billion to 36 states respectively, for infrastructural development. The loan document, split into three parts – programmes and projects $11.247bn; special national infrastructure $10.686bn; and Eurobonds and federal budget support, $4.5bn and $3.5bn – didn’t include the sectoral narratives, which made it hard to discern the benefiting geopolitical or economic sectors. But we know this much. Nigeria’s infrastructures are in bad shape and needs remediation. But the dismal state of our infrastructure is hardly by happenstance; they failed gradually, through poor policy articulation and implementation, wrong priorities and wrong utilization of previous loans. Nigerians remain cognizant that past foreign loans dedicated to Nigeria’s steel sector yielded very limited results.

    The value and amortization terms of any loan are best assessed, if the loan is meant for hard infrastructure – power, housing, toll bridges and roads – that yield returns. Same is not always true of loans for soft and social infrastructures. Thus, it may be wise to borrow for hard infrastructure; yet not so wise to borrow for soft infrastructure. This position does not discount the overarching importance of soft infrastructure, needed to promote quality of life and human development, since rising youth unemployment, inequality, and poor healthcare delivery are corollaries of growing disenchantment and portend risks. Nigeria having only extricated herself from the sapping London and Paris Club debts just a decade ago, some heady questions arise. Will Nigeria’s borrowing outcome be any different now? Here is the challenge: Can an external loan – quick-fix, ad-hoc funding – couched in the attractive term of “infrastructure fund” even if it serves as stimulus or bailout, begin to redress existing infrastructure deficit, if its utilization is not properly handled?

    Infrastructural deficit in Nigeria remains huge with sectoral infrastructures suffering major setbacks, which manifest in dismal electric generation and distribution; crumbling roads and bridges that are further exacerbated by a poor maintenance culture.  The deregulated national air transportation system struggles, due to the existing oligopolistic market structures. Recent census shows that the national commercial air fleet shrank from a total of 60 to 20 planes in the past year alone. Prevailing operational challenges translate to air safety concerns. Nigeria is also underserved by its limited ports and waterways infrastructure. The sector is hampered by navigable, but yet to be dredged inland waterways totalling some 3,300km, and dearth of modern vessels. Nigeria’s housing deficit is estimated at 16-20 million, but Nigeria’s housing infrastructure is so laggard that even 20% of its housing needs are presently unrealizable. The mortgage sector remains dysfunctional, given prevalent inefficacious mortgage policies and regiment.  Whereas real estate construction contributed $990 billion or some 6% of U.S. GDP in 2015, and 4% of GDP in Ghana, in Nigeria, contributions via mortgages is a dismal 0.5% of the GDP.

    Whilst Nigeria’s GSM system is much improved, Nigeria’s 97 million GSM users are still underserved with only 21% broadband penetration. With Boko Haram destroying most GSM urban furniture in the North-east; the national landline systems have totally collapsed and are non-existent in most parts of the country. Such setbacks are worsened by high tariffs, lack of periodic maintenance, insufficient public sector funding and unavailability of stable bond and capital markets.  Even as Nigeria’s ICT sector yielded N1.4 trillion in FQ of 2016, the nexus between the parlous state of Nigeria’s communication infrastructure and her inability to fully catalyse the “use of ICTs for different aspects of national development” persists. Relatedly, Nigeria’s rating on the World Economic Forum’s Global Competitiveness index, which assesses “countries’ ability to have good and steady electricity supply, road quality construction, air transportation, and port and rail infrastructures”, remains bleak. Two consecutive surveys between 2014 and 2016 ranked Nigeria 133rd and 134th respectively, out of 144 countries.

    Infrastructure funding and challenges were of lesser concern during the military era. Because democratically elected governments view infrastructure development as democratic dividends, the Jonathan administration prioritized infrastructural development via the National Integrated Infrastructure Master Plan (NIIMP), which linked key economic sectors. The plan envisaged to last for 30 years, would guarantee sustainable economic growth and development and bridge existing infrastructure deficit, if fully implemented. Still Nigeria has suffered from the inability of successive governments to follow through on approved infrastructural projects.  Hence, leadership change and politicians jockeying for preferential funding and sitting of constituency projects, continue to impact negatively on infrastructure development.

    The value of Nigeria’s infrastructure is relative to her historical realities regardless of whether the funding is borrowed or budgeted. Historical realities also reflect the federal government’s unending inability to leverage accruing oil revenue to develop national infrastructure fully. Resultantly, poorly funded and executed policies have contributed to awful deliverance or abandonment of strategic infrastructural projects. Meanwhile, states are increasingly averse to rehabilitating decrepit federal infrastructures, given extant policies prohibiting such repairs without prior authorization and challenges in recouping funds expended by states on federal projects.

    Funding infrastructure via budgets or loans is no longer as important as finding the political will for executing and delivering national projects fully. Not delivering on requisite infrastructure amounts to short-changing the national population and retarding development. As Ejeviome E. Otobo, averred in the recent edition of Jeune Afrique, “The ability of all tiers of government to increase citizens’ access to pipe-borne water, public healthcare and of the federal government to increase electricity supply will be an important test of their commitment to inclusive growth.” And as Abraham Nwankwo, Nigeria’s debt management czar observed; “If the economy does not succeed in converting the external borrowings to domestic productive capacity and self-sustaining economic growth, with substantial diversified export component, the resulting economic and social disruption will be unbearable.” Translated from our historical past to here-and-now, “unbearable” means recession, the new normal for Nigeria. Hence, advancing Nigeria does not require a foreign loan likely to be mismanaged, but a clear delineation of institutional structures and responsibilities for driving the deployment of critical national infrastructure. Such delineation will influence funding, resource and burden sharing among the three tiers of government, with a view to improving domestic productive capacity and sustainable development.

     

    • Obaze and Okoye are of Selonnes Consult Ltd.
  • Infrastructure upgrade to cost N200m at FGC Ilorin

    Infrastructure upgrade to cost N200m at FGC Ilorin

    The Federal Government is spending about N200 million on the upgrade of infrastructural facilities at the Federal Government College Ilorin, Kwara State, it was gathered.

    The government is tarring 10 kilometres of road within the compound of the school.

    Parent Teacher Association (PTA) Chairman, Alhaji Isiaka Adesina told reporters in Ilorin, the state capital, that already the authorities of the college have called for tenders.

    Alhaji Adesina said that “contractors have applied. I assure you the job would commence when the school goes on vacation, as government wants the job completed before January 2017.

    “The advantage of the contract is that we will have additional classrooms and by extension student population will increase. With more classrooms more students will be accommodated.

    “Secondly, the investment will provide more conducive learning environment for the students. With this the student performance will be excellent.

    “The funds allocated by the federal government are for the college to execute policies, programmes and projects towards achieving the mandate of the college.

    “I urge the old students of the school to do more in the provision of more infrastructural facilities in the school.”

    He dispelled comments accredited to the National President FGC Alumni Association, Jumai Ndalugi that the school suffers from monumental infrastructural decay.

    Said he, “The PTA would beseech the old students association executive to pass vote of no confidence on Jumai Nadalugi since she does not have the interest of the school at heart.

    “She has displayed sterling moral bankruptcy to deform, defame and damage the image and reputation of this noble college. She has shown and proven beyond all rationale that she cannot represent and portray the noble objectives of the old students association.

    “Similarly, we entreat the Federal Ministry of Education to take action both civil and legal to caution the national president. She should be made to proffer proofs for her allegations.

    “Furthermore, the PTA is very proud of the Director/Principal, Mrs. Rita Okpaleke. She has become a litmus test for any principal that would take over from her. Her passion is untrammeled, her outstanding moral and ethical disposition is highly sought for in this demanding time.”

  • FG spends N750b on infrastructure in five months-Adeosun

    FG spends N750b on infrastructure in five months-Adeosun

    The federal government has spent over N750billion on infrastructure in the last five months, Minister of Finance, Mrs. Kemi Adeosun, has said.

    The minister gave this hint yesterday at a public forum in Lagos, where she was guest speaker at the Wealth Creation Platform 2016, organised by KICC International.

    According Mrs. Adeosun, the federal government was concerned about the growing infrastructural deficit in the country, hence the President Muhammadu Buhari-led administration has made infrastructure finance one of its major priorities.

    “In the past few years, 90% of all what we were spending on was on recurrent leaving just 10% for capital projects. For instance, when we came on board, we discovered that the federal government spent N19billion on infrastructure in 2013 while it spent a total of N64b on travels, N51billion on welfare like rice, biscuits, coffee, and tea. If you spend for the wrong things you are going to get the wrong results,” she said.

    The economy, she emphasised, “Can’t grow if you don’t have the right infrastructure. Why is infrastructure important? It is important because it helps to unlock the economy and productivity of the nation. This is why the federal government released over N750 billion in the last five months to boost infrastructure. The country requires at least N25billion yearly to cater for our infrastructure and that is why we’re prioritising infrastructure and also urging the state governments to align with us so that we can all move in progress together.”

    The minister who acknowledged the fact that country was in dire financial straits at the moment, said things would have been a lot better if the right infrastructure was in place.

    Waxing philosophical, she said, “Often things get worse before they get better. Most nations that are doing well today have passed through some kind of adversity. Ethiopia, that everybody is talking about today invests over 60% of its budget on infrastructure, they export flowers to Holland and make a lot of forex in return. Nigeria needs to take a cue from such good examples.”

    The federal government, she further hinted plans to increase its expenditure on infrastructure in 2017 to bridge the growing infrastructure gap in the country.

    “We have set up the Road Trust Fund, where we hope to use pension funds to massively fund roads that can be tolled,” she said.

    Besides fixing infrastructure, the Buhari administration, she stressed, is also determined to address the ease of doing business.

    Speaking earlier, Mrs. Folorunsho Alakija, a businesswoman who is the richest African woman, urged the prospective start-ups to work hard, prioriotise, manage their expectations and plan adequately for their businesses in order to succeed.

    Addressing the participants separately, the host pastor of KICC International, Maryland, Lagos, Pastor Femi Ashiru, the Senior Pastor Matthew Ashimolowo, said Nigerians must be willing to endure the present predicaments for the country to be great again.

     

  • Suswam: I invested N107b in infrastructure

    Suswam: I invested N107b in infrastructure

    Former Benue State Governor Gabriel Suswam has said he invested the N107 billion, which the Justice Kpojime-led Commission of Enquiry accused him of embezzling in “critical infrastructure”.

    The Governor Samuel Ortom-led administration  said the ex-governor allegedly embezzled the money.

    Suswam, with his Finance Commissioner Omadanchi Oklobia, is on trial  at an Abuja court for alleged corruption.

    But at the burial of Terna Ugba in Ugba, Logo Local Government, at the weekend, Suswam said the N107 billion can be found in the roads, electricity and health projects his administration undertook.

    He reiterated that he invested in the three senatorial zones.

    “Both members of the ruling and opposition party are using the roads which I built but they won’t give me credit; they are bent on castigating me. But one thing is I will never fear anything, though I don’t look for trouble. Even if it means going to jail, I will go,” Suswam said.

    On the chieftaincy bill which Ortom signed into law, the former governor said he initiated the idea so Benue could have as many first class chiefs as possible.

    He advised the people to love one another despite political differences.