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Infrastructure development is critical to achieving human capital development in any society. The economic impact that infrastructure improvement has on nation building cannot be over-emphasised. The growth of any country’s economy hugely depends on the status of its infrastructure. The dearth of needed infrastructure in a given society places serious limitation on human capital development.
It is, perhaps, in view of its crucial role to achieving rapid economic growth that advanced nations of the world commit huge investment to infrastructural development. J.F. Kennedy, a former President of the United States of America, USA, once put the relationship between infrastructure development and economic prosperity into a proper perspective when he affirmed that: “America has good roads, not because America is rich, but America is rich because it has good roads”.
According to the World Bank, every 1% of government funds spent on infrastructure leads to an equivalent 1% increase in Gross Domestic Product (GDP), which invariably means that there is a correlation between any meaningful inputs in infrastructure development which reflects on economic growth, indices, hence the value of infrastructure cannot be underplayed.
In a struggling economy like ours, economic development can be further facilitated and hastened by the availability of needed infrastructure. If these facilities and services are not in place, development will be slow and full of obstacles. Sadly, this is the stage that we are in Nigeria. It is, therefore, not surprising that the rate of economic growth and development I our country is not appreciable. This, indeed, is part of the reasons while ours remain a monolithic economy that is hugely dependent on crude oil since independence. It is our inability to develop critical infrastructure in the country that hugely account for such sad development.
According to National Bureau of Statistics (NBS), over the last decade, Nigeria’s infrastructure spending contributed a 1.9 percent (approximately $4 billion) per annum to GDP. The recommendation of the Asian Development Bank in the KPMG report is that in order for a developing country to sustain growth and development, not less than 6 percent of GDP should be invested on infrastructure. According to a CBN figure, Nigeria is currently investing about 7 percent of GDP on infrastructure, which is above the average for Sub-Saharan Africa. However, there is the need to increase this figure to at least 12 percent of the GDP.
Presently, our nation faces dire economic reality as a result of dwindling global price of crude oil which is the mainstay of our national economy. There have been talks on the need to diversify the economy by focusing on other sectors such as agriculture, Small Scale Enterprise, extractive industry among others. With the dearth of a well crafted intermodal transportation mode in the country, the road remains our major and most pragmatic means of transportation. With the sad neglect of strategic infrastructure in the country over the years, our desire for the diversification of the economy might be nothing but a mere hallucination.
To put the Nigerian economy on the lane to speedy recovery and growth, all tiers of governments must be immediately committed to a result-driven programme that would make infrastructure development a top priority. Diversifying the Nigerian economy will require huge investments in infrastructure and the federal government identified this as a major priority in the 2016 budget, increasing capital expenditure by 223% to N1.8 trillion (~US$9.05 billion). This amount accounts for 30% of the total 2016 budget compared with ~11% (N557 billion) of the total 2015 budget.
As things stand, Nigeria will not be able to sustain her current levels of population and economic growth without enhancing her infrastructure. Investing in infrastructure will drive economic growth, provide jobs and deliver vital services to the country and the majority of its citizens. According to the World Economic Forum, every investment expended on infrastructure development in areas such as, power, public transportation, the environment, security and telecommunications, generates an economic return of 5% to 25%.
The centrality of infrastructure to the growth of the Nigerian economy demands for a fruitful partnership between the public and private sectors. While all tiers of governments continue to work on much needed policies, plans and programmes that will properly articulate infrastructure development blueprint for the country, the private sector must equally be ready to efficiently exploit available opportunities for investment in infrastructure.
To put the nation in good stead in terms of economic development and growth, there is must be a conscious effort to work towards better planning, stronger technical partnerships and inventive as well as strategic plans for financing infrastructure needs across the country.
There is no better time to invest in Nigeria’s infrastructure and no better time to contribute to the diversification of the Nigerian economy than this moment. If we are to put the Nigerian economy on a stronger footing, this remains a major way forward.
Tayo Ogunbiyi
