How Nigeria can dump foreign loan, yet overcome development challenges – Experts

… Says Africa has systemic infrastructural deficits that impede harnessing of potential

Nigeria and other countries in Africa must stop depending on foreign loans, but rather seek innovative ways to overcome its development challenges, experts have said.

The expert stated that it is well-known that foreign aid is volatile, undependable, and delusional for countries to depend on it for development.

The experts stated this on Monday at the press briefing in Lagos, ahead of the Africa Think Tank for Infrastructure Development (ATTID) summit in South Africa.

At the briefing, the duo of Sylvester Odion Akhaine, a professor and Director, Strategic Communication, Africa Think Tank for Infrastructure Development (ATTID) and Alfred Chiakor, Director, Planning and Implementation, ATTID, spoke on “The Imperatives of Global Partnership for Africa’s Infrastructural Development.

Odion stated that the G20 Summit of industrialised nations, through its Financing for Sustainable Development Task Force, granted the Africa Think Tank for Infrastructure Development the right to host the Infrastructure and Sustainable Development Side Event.

The professor stated that the event will be held before the main summit as a forum for world leaders, chief executives of international development agencies, international investment institutions, financial services companies and banks, regional economic commissions, regulatory agencies and international infrastructure entrepreneurs.

“It will be held under the theme: Enhancing Africa’s Infrastructure Transformation Agenda through Investments and Partnership at The Lakewood Conference Centre, Johannesburg, South Africa on 20-21 November”, he said.

Speaking further, Odion stated that there is a logical connection between infrastructure and economic development.

According to him, “It is well-known that foreign aid is volatile, undependable, and delusional for countries to depend on it for development.

“Unfortunately, for obvious reasons bordering political instability and ignorance of the huge economic potentials of the continent, the flow of Foreign Direct Investment (FDI) has been paltry. As of 2012, FDI flows to Africa were estimated to be US$50 billion.

“In 2023, FDI flows to Africa stood at US$53 billion, Egypt and South Africa were the largest recipients on the continent.

“There has been steady disproportionate growth. According to the latest World Investment Report from UN Trade and Development (UNCTAD Foreign investment in Africa soared to 75%, about US$97 billion in 2024, in ways that benefit most sub-regions on the continent.

“That figure represents 6% of global FDI. North Africa had a greater share of the inflows.

“Also, international project finance (IPF) deals rose 15% in value, fuelled by large energy and transport infrastructure projects. Intra-regional investment within sub-Saharan Africa (SSA) by regional players has soared in recent years,” he said.

“Economic development is generally understood as the increase in the stock of goods and services in a country in ways that increase the well-being of its population.

“Without a doubt, our continent is plagued by several development challenges.

“These include desertification, illiteracy, unemployment, food crisis, civil conflicts, poor transportation and communication infrastructures”.

The scholar stressed that it is generally acknowledged that roads, power, water, sanitation, sea, and airports, among others, are basics for growth and economic development.

Odion stressed that the Nigerian conglomerate, Dangote, has built a network of cement plants, from Tanzania to Senegal.

He added that South Africa has shown leadership in this regard, saying that MTN has become the eighth largest communication company in the world, and with growing patronage from Africans, is investing in telecommunications on the continent. Nigerian banks are making forays, such as Access Bank PLC, Zenith Bank, Globacom and Dangote PLC.

“To be sure, intra-regional FDI made up, on average, 21% of SSA’s total inward FDI stock in 2020-23. In the preceding decade, it stood at about 14.7% in 2010-19 (see World Bank analysis of data from the IMF’s Coordinated Direct Investment Survey).

“This was an upscale performance compared to the intra-regional FDI share in Latin America, the Caribbean, the Middle East, and North Africa in the same period.

“This is to be encouraged, and the side summit provides an auspicious window to deepen intra-African investment,” he said.

On infrastructure deficits, he said that sundry observers of Africa’s problem have pointed to profound deficits in infrastructure: a poor road network, subpar electricity supply, and inadequate communication facilities.

Odion said that Africa has deep and systemic infrastructural deficits that impede the harnessing of its potential.

“Two and a half decades ago, the situation was dire. A 2010 UNECA Report underlined the inadequacy of the transport system. Paved road density was put at 31 kilometers per 1000 square kilometers in SSA.

“The total road density is put at 137 per 1000km, representing 65% of the developing world.

“Today, the situation is even dire with increasing population and urbanisation. Therefore, closing the infrastructure deficit is vital for Africa’s economic prosperity and sustainable development.

“According to the African Development Bank (2023), Africa requires USD 130 – USD 170 billion per year in financing to meet its infrastructure development objectives and goals in sectors such as energy, transport, water, sanitation, urban, and ecosystems.

“The high annual infrastructure deficit exists in the context of the poor fiscal situation of many African governments. In 2021, the average tax-to-GDP ratio for 33 African countries stood at 15.6% (Revenue Statistics in Africa, 2023).

“This is low compared to the averages for other developing regions, such as Asia-Pacific (19.8%) and Latin America and the Caribbean (21.7%),” he said.

He noted that according to the World Bank (2023), between 2021 and 2022, the fiscal deficit in the sub-Saharan African region widened from 4.8% of GDP to 5.2% of GDP, saying that beyond challenges relating to the cost of and access to infrastructure services, the quality of these services is also low on average.

He said, “Together, these have contributed to the estimation that poor infrastructure has resulted in a 40% loss in productivity in African countries and up to a 2-percentage-point reduction in annual national economic growth (African Union, 2023).

“The Continent requires a diversified transport system that would allow its people to interface in all spheres of human endeavour. These, of course, would include the sea, air, and roads.

“The railway system must be revitalised, continental highways are imperative, and so is an effective water transport system. So, a few years back, The London Economist painted a gloomy picture of the state of transportation on the continent.”

He quoted them to have said that “Transport is a perpetual problem in Africa. Potholed roads and missing rail links get in the way of economic growth. Intra-regional trade accounts for just 31% of total commerce, compared with 53% in emerging Asia. Landlocked countries suffer the most.

“Transport cost can make up 50-75% of the retail price of goods in Malawi, Rwanda and Uganda. Shipping a car from China to Tanzania on the Indian Ocean coast costs $4000, but getting it from there to nearby Uganda can cost another $5000.”

On the imperatives of the Summit, the experts said that it is acknowledged that investment facilitation efforts continued to feature prominently in Africa, accounting for 36% of policy measures for investors.

He said that addressing the challenges of the infrastructure deficit in Africa requires multi-faceted partnership and collaboration with diverse Stakeholders.

According to him, the Side Event shall intensify interface and strong engagement with diverse stakeholders, including government officials and institutions, international investment partners, international infrastructure service providers, and international development agencies.

Others, he said, are regulatory agencies, private venture capital holdings, regional economic commissions, etc., to evolve a master plan for infrastructural transformation, financing, investments and other viable options for the development and transformation of the physical, economic and other critical infrastructures in Africa.

“The Side Event shall also stimulate the generation of a pipeline of new ideas as well as provide a networking environment for identification of opportunities for infrastructure investment/development, while at the same time strengthen existing and new strategies for accelerating economic growth and the achievement of an ecosystem of sustainable priorities; delivering quality infrastructure sustainably and efficiently; and also address key economic, social, and other development gaps.

“In the main, the Side Event shall: Promote the development and transformation of African infrastructure backbone projects and the re-engineering agenda. Intensify advocacy for a full range of options for accessing public and private sector financing, investments and funding for infrastructural development in Africa.

“Enable effective linkages and collaboration between critical infrastructure and other Resource Providers. Promote inter- and intra-regional infrastructural linkages and networks for economic integration.

“Facilitate vast investments by attracting Public-Private Partnerships and inclusive economic growth in the current competitive local and international economy,” he said.

He emphasised that the event shall be structured into business sessions, with sub-themes that are consistent with the overall objectives as highlighted above.

“At the end of the event, advocacy to scale up infrastructure financing, investments, and funding opportunities shall be strengthened; new opportunities for investments shall be explored and identified; collaboration for public-private partnerships shall be engendered; and a pipeline of new ideas and strategies for infrastructural development and transformation shall be stimulated.

“The event shall also add value in strengthening in-country mechanisms and institutional capacities to tap into the infrastructure financing superstructure, and also increase the continent’s participation in regional and global value chain delivery systems,” he said.