Moritz Abazie is the chairman of Strides Group, the owners of Strides Energy & Maritime Limited. In this interview with some journalists, he speaks on how to push economic growth and the need for increased public-private partnership to bridge infrastructural gaps. Kenneth Alison brings you the excerpts:
What must Nigeria do in the area of infrastructure building to tap from its vast population?
As I have always stated, development economists will always attest to the fact that availability of quality infrastructure can directly raise the productivity of human and technical capital. This includes access to roads, improved education, market for farmers’ output, energy, amongst others. All these facilitate private investment and improve job and income levels.
Government’s investment in infrastructure activates the economy because when the economy is starved of infrastructure, human development is retarded and the economy cannot attract investment. Nigeria, or any other country in our situation, should put together a financial and business model for massive infrastructural development; there is no alternative to that.
A public-private partnership has been found to be the most effective model for doing this, as the model aligns economic goals of government with profit motives of the private sector, and with that, we can drive infrastructural development.
Energy for instance, is a great input to other infrastructural subsectors, and so have a very high social impact; we cannot make any meaningful growth or improve income level or job creation in the economy without fixing the energy supply and that is how it works and as well affect other sectors of the infrastructural layout.
How long will it take for the country to make headway in critical development infrastructure?
We cannot put a timeframe to that, because there are so many deciding factors at play in determining the infrastructural investment growth of any nation.
In our own case, the dynamics is a bit complex; the strategy formulation is something that we must get right or we have always gotten right as a nation, but the execution of the blueprint is a problem.
We need to gauge the political and institutional capacity and design a medium and long-term strategy. So, it’s all about the political will and institutional capacity; even when the political will is there, do we have the institutional capacity too?
If these two things are not aligned, we cannot put a timeframe, as it is a project execution issue that starts with policy formulation and determined by political will.
All these are things that you can’t measure or put a figure to in our nation today, but we just have to get started.
Most of the times we do a lot of blueprints, design strategies, but when we get to execution, we fail.
Again, the country needs to get started, but to put a timeframe is not feasible at the moment.
How best can Nigeria leverage the public-private partnership model in its quest for development?
When we talk about public-private partnership, we are looking at the government partnering with the private sector to create a transparent and sustainable model that is not susceptible to the political fabrics of the nation.
The government can take a fund for instance, set up a management for it, invest or provide its own contributions into that fund, determine the areas it wants to intervene in terms of infrastructure, and design investment packages that will be attractive to private investors.
The goal of private investors is to make profit; while the goal of government is to provide infrastructures that will activate growth in the economy.
So, the alignment of these two goals and objectives creates a business case – if the government provides 30 per cent and private investors provide 70 percent, for instance, and investment is made, and the business takes off, the government can also divest and commit the recovered resources into similar ventures of this nature. That is one model that can be used to reduce risk perception of investors as a result of government presence.
Still talking about infrastructure, how far can oil/gas revenue go in addressing these deficits?
Relying solely on oil and gas revenue to meet all the country’s needs has not served us well over time; in fact, if you balance the nation’s oil and gas wealth against its total population, we cannot be said to be oil and gas-rich.
But even at that, with our present circumstance, our gas sector can still be developed further as there are more potential in our gas sector, which we are yet to develop effectively.
There are reasonable opportunities to maximise our revenue from the sector by removing impediments to investment, which we are yet to do.
This will help the nation’s revenue stream, and there is no doubt about that.
But even then, the government lacks the capacity to make any meaningful investment in infrastructural capacity building without relying heavily on debt funding. This is because we are finding it difficult to cover our current expenditure or provide necessary funding for our security challenges.
We cannot say that the oil revenue will continue to provide us with necessary leverage to develop our infrastructure.
So, what are the available options now?
The option available now is to open that sector up for private investment by putting together investment packages and economic architecture that makes it attractive. We are relying so much on debt funding and that is a difficult approach because we are increasing the debt-servicing burden of the government.
It can only whittle down the capacity of government going forward, to even meet its recurrent expenditure.
We need to look at other economic models for doing this without over burdening the nation with debts.
In your view, is Nigeria’s gas resource underutilised?
Presently, we are still flaring gas, and this is because a lot of proposed projects for harnessing this gas are yet to take off for various technical reasons – some arising from legal constraints.
If these constraints can be removed and the projects take off, there are various uses of gas apart from its use as source of energy, which is in high demand globally. Gas is a feed-stock for a lot of industrial manufacturing activities including fertilizer production, plastic raw materials production.
The gas resource we have is capable of providing an impetus to a complete industrial sector, capable of supporting the entire economic needs of the nation.
Countries like Iraq, United States, Russia, are investing heavily in this area and pushing to leverage on the global interest on gas because it is a clean energy, and most nations of the world want to clean up their environment
So, the demand is high, and we have a responsibility to develop and leverage on it while the market is there.
On the other hand, how can the country really depend on its solid mineral deposits?
Prior to the oil boom, solid minerals contributed hugely to the economy and provided revenue for infrastructural development.
But since the discovery of oil, the whole dynamics changed and the sector was neglected; now it will require a lot of investment.
We need to put structures in place to make the sector attractive to investors. We need to give the sector the required attention.
I don’t think the sector has been positioned to make huge impact or provide the revenue needed to fund infrastructural development. It’s still a long way to go.
What do you think are the real implications of the late passage of the 2018 Budget?
Government expenditure is the major driver of economic activities in the country; so, delay in the investment funds arising from late passage of the budget will reduce industrial activities and have negative impacts on all sectors of the economy.
The delay in passage and implementation of the budget can cause huge economic decline.
So, the non-expenditure on government’s developmental agenda or delay in passage of budget or disbursing the necessary funds into the economy, will affect project execution, infrastructural development. Projects will suffer, contractors who work in this sector will be out of job, unemployment level will increase, economy will be denied the multiplicity effect of the government expenditure, and this will worsen all economic indicators.
Which sectors of the economy do you think will be worst hit by this delay?
All sectors will be affected because if you observe over time, we have been experiencing delays in the passage of the budget and it has become a normal thing in the country.
If you look at the performance of virtually all companies in the stock exchange, you will find out that in the first two quarters of the year, the performance is always poor. The second two quarter of the year is when economic activities begin to pick up. That is because the budget implementation begins in the third quarter.
So, the moment the economy is starved of the financial flow that comes from government expenditure, it affects everything in the system.
