As in housing and mortgage, where deficits are substantial with estimated value at N60 trillion and $38 billion respectively, Nigeria also has deficit in infrastructure estimated at $300 billion by the African Development Bank (AfDB) which experts attribute to lack of enabling policy and security of investors.
Globally, infrastructure is one single factor that drives economic growth and development and, unlike Nigeria where investment in it is only one percent of her GDP, nations invest heavily in infrastructure such as power, roads and rail infrastructure to catalyse growth in their economies.
Though the Act establishing the Infrastructure Concession Regulatory Commission (ICRC) in Nigeria provides for concessioning, which is a vehicle for providing infrastructure in most countries, the experts say the right policy is not yet in place for concessioning of roads, rail, ports, among others in this country.
As Africa’s biggest economy, the country lags behind other sub-Saharan countries in infrastructure spending and according to a report from the International Monetary Fund, Finance & Development (F&D), Nigeria is at par with South Sudan at one percent spend, while Angola, Cape Verde and Lesotho spend 8 percent of their GDP on infrastructure.
“Infrastructure deficit in Nigeria is also as a result of inability to plan for the growing population. As a nation, we have not made significant investments in our common infrastructure. Most of the major roads, highways and bridges we use today are those that were built in the 70’s”, says Oguche Agudah, Chief Investment Officer and Executive Director at NatanelFlorence.
Aguda notes that the model of infrastructure development by which the country votes billions for infrastructure development through the parastatals and arms of government is faulty; “and because these processes are not always transparent, the funds keep going into private pockets or we get a shoddy job in the process”.
Concessioning the existing roads and rail infrastructure could bring the change needed in the economy at the moment, but all these need putting the right leadership and policy in place, the experts observe.
They advise that a system should be created whereby investors can invest confidently and profitably, knowing that agreements will be honoured and their interests protected, noting that the failure of concessioning has always been as a result of lack of the right policies that investors could fall back on.
Aguda agrees, stressing that “the government needs to evolve a model that empowers the private sector to fund infrastructure under a transparent PPP model that ensures that the financiers recoup their investments, but it needs to have an equity in the form of land and right of way, among others, so that the cost outlay is not too high for the financier, and the end price too exorbitant for the final consumer”.
The sustainable model is creating a system whereby investors can invest confidently and profitably, knowing that agreements will be honoured and their interests protected.
For a country of 180 million people, Nigeria’s core stock of infrastructure, according to the AfDB, is only 20-25 percent of her GDP, compared with 70 percent for other middle-income countries of its size, leaving a gaping infrastructure deficit of $300 billion.
This deficit impacts on every sector of the country’s economy, especially housing, where Hakeem Oguniran, MD of UPDC Plc, estimates that infrastructure alone constitutes 30 percent of the cost of construction, taking house prices way beyond the reach of many home seekers.
Not too long ago, the Federal Government initiated the National Integrated Master Plan (NIIMP) with a 30-year framework to review the current infrastructure investment stock that will be increased annually from $15.9 billion (about N2.86 trillion based on current exchange rate) in 2014 to $51.1 billion (N9.2 trillion) in 2018, representing an average of $33 billion (N5.95 trillion) annually.
CHUKA UROKO
