Over the years, Nigeria has carried on with the burden of infrastructure deficit. Globally, experts project that the infrastructure gap by 2040 will be about $15 trillion with Nigeria’s share of that estimated at ₦3 trillion ($7.9 billion).
The infrastructure situation, especially roads, in the country is dire. Only 14.9 percent of Nigeria’s approximately 200,000 kilometres of roads network is currently paved, tarred or motorable. That means most roads in the country are in terrible condition as reflected in Lagos-badagry Expressway, Enugu Onitsha Road, Enugu-port Harcourt Expressway, among others.
The rails are not any better, though some attention is going in that direction even with the heavy debt burden. The power sector is a story for another day.
Growing population and rapid urbanization, coupled with underinvestment, have combined to not only widen the gap, but also weaken the country’s infrastructure stock, making it incapable of catalysing economic growth and raising living standards.
Among its peers, including Ghana, Ivory Coast and Kenya, Nigeria is the least investor in infrastructure. “Nigeria is underinvesting in infrastructure,” Bode Agusto of Agusto & Co Limited confirmed at a real estate forum in Lagos.
Read Also: Privatisation of idle assets: Sustainable solution to Nigeria’s fiscal quagmire
Agusto recalled that, during the five years ended 2016, these countries invested 5.3 percent, 6.5 percent and 7.5 percent respectively of their national income in infrastructure, while Nigeria invested only 2.1 percent.
Emmanuel Odemayowa, MD/ CEO, Cavalli Business and Investment Group, shares Agusto’s views, adding that the value of Nigeria’s total infrastructure stock which includes road, rail, power, water, telecoms, airports and seaports, represents only 35 percent of its GDP.
“This is far below the level of peer emerging market countries where the average is 70 percent,” he said, pointing out that to optimise the contribution of all these sectors, “Nigeria needs to invest $3 trillion in infrastructure over the next 30 years,” Odemayowa said.
The World Bank says there is a link between infrastructure spend and national economic growth, estimating that a sustained 20 percent growth in infrastructure spending leads to 1.8 percent growth in the economy.
The implication of this for Nigeria is that it has to shore up its infrastructure funding, but because it is cash-strapped at the moment with dwindling revenues resulting from the crash of oil price, it has to look for viable options to source funds for investment in infrastructure to engender economic growth.
Annual budgetary allocations have been the major source of funds for infrastructure development in the country which that makes mockery of expected economic growth because apart from insufficient allocation, budget discipline has no place in Nigeria.
However, infrastructure tax credit initiative as contained in the Executive Order 7 signed by President Muhammadu Buhari, and the Highway Development and Management Initiative (HDMI) are viable options that need to be taken seriously.
Whereas the Infrastructure Tax Credit initiative allows individuals or institutions to provide infrastructure for the government in lieu of paying tax as is being done by Dangote Group on Apapa-oshodi Expressway at the cost of N73 billion, HDMI seeks to concession 10 of federal highways with a view to creating investment, about 163 billion, and several jobs.
There are, however, other better and more viable alternatives. Analysts want government to look for partners such as International Development Institutions/agencies (IDAS), local businesses and foreign businesses in a public private partnership (PPP) arrangement.
Projects that readily lend themselves to this kind of arrangement are those with strong economic and social impact like the national grid, railway infrastructure, railway rolling stock, bridges; and also projects with weak economics but strong social impact such as water for rural communities, rural electrification, among others.
The benefits of this option, according to Agusto, are that project costs drop significantly; projects are completed; there will be improved transparency around government projects and reduction in corruption. It will create significant economic activity and employment, grow the tax revenue of government, and improve the quality of life by providing access to electricity, railway, water and roads.
In the rail sector, government is known to have borrowed extensively to fund the resuscitation of the country’s decrepit rail sector to a modern standard gauge. But industry analysts have expressed fears that this approach will, in the coming years, mortgage Nigeria as a debtor-nation with China as the greatest benefactor.
The analysts have, at many fora, canvassed for public-private-partnerships (PPP) arrangement for running the rail transportation system in the country to make it more effective and better managed have blamed successive governments at the centre for the total neglect of the out-offashion narrow gauge rail tracks.
With a very clear policy and conducive investment climate that will be very re-assuring under any PPP model, there is no need for cash-strapped Nigeria in the true sense of it to look outside the shores of this country to borrow to build infrastructure projects.
The call for the PPP model is seen in many global economies as the best viable options for cash-strapped developing economies like Nigeria to source funds to revive its weak infrastructure such as rail transport sector which plays vital role in the movement of goods and services. It has worked in many countries in Africa including Ethiopia.
Expectations of Nigerians on the outcome of this year’s gathering of economic egg heads for the 26th NESG Summit as it affects rail transportation, much neglected for the past half decade and now in the midst of a revival as old lines and assets undergo modernisation, should be about best methods the new standard gauge should be operationally cost effective and meet the transport needs of citizens upon concession through public-private partnerships (PPPS).
When PPP is applied and better managed with the overall interest of commuters as the overriding objective like other global economies, traffic volumes will increase with rail looking to secure a position as a key mover of goods and people.
In the areas of rehabilitation, it is instructive to note that rail contracts in excess of $3 billion have been awarded since 2009, and the Nigerian Railway Corporation (NRC) has been allocated a budget of N104bn ($634.4m) over the past five years.
Much of the focus to date has been on restoration, with 90 percent of the system earmarked for upgrades. Presently, work has reached advanced stage on the 156.5 kilometer Lagos-ibadan standard gauge rail project calued at $1.5 billion. The corridor is part of the recommenced vital 1124-km inter-city passenger line linking Lagos and Kano. The 1167-km Port Harcourt-maiduguri route is also being rehabilitated.
Current efforts are on course to double-track the 1.5-km route connecting the main port of Apapa to the inland rail network, although much shorter, are key for inter-modal freight movements.
Lagos with a population of over 20 million people is another example where private investors under the PPP model with the ongoing project work on the red and blue line rail networks should be encouraged to be the major drivers of change in the rail transportation sector to solve the persistent gridlock caused by the perennial high passenger and vehicular density in almost all the city’s major road networks.
Once operational, Lagos will no longer be the world’s only mega-city without an urban rail network. The blue line, a 27-km, 13-stop route between the Marina, on Lagos Island area and Republic of Benin border, is expected to be the first completed.
A consortium led by the Lagos state government has put up the funding, though subsequent lines will be constructed via concession arrangements. The north-south, 37km red line linking Agbado to the marina area via the international airport will be structured as a fiveyear build-operate-transfer (BOT) agreement, with the concessionaire building the track and providing rolling stock.
