International experts at a recent conference in Lagos posited that Nigeria needs a whopping $3 trillion over the next 30 years to plug the nation’s infrastructure gap and achieve rapid sustainable development. That, indeed, is a huge budget by any standard. As far as Nigeria is concerned, that is understandable considering the extent of decay in the system.
They did not stop at that as they went on to say that though government must be a primary source of funding, federal and state governments’ fiscal inflows have been proved to be grossly inadequate to match the pace of investments required in infrastructure.
According to the Nigeria Economic Recovery and Growth (ECRG) Plan 2017-2020, the Federal Government’s medium-term fiscal framework forecasts deficits of N7.6 trillion from 2017 to 2019, an evidence that the federal government resources are limited and additional resources will be needed.
Already the government is conscious of the situation and that is why one of the three broad strategic objectives of that Plan is to build a globally competitive economy and one of the plans for achieving that is by investing in infrastructure thus, every avenue towards developing them must be explored.
But the experts argued that money is not the main problem of infrastructure financing. They cited other challenges such as bad procurement processes, structural problems that make it difficult for investors to get value for money, funding structure, maintenance, tolling, among others. They also, frowned at inadequate attention which Nigeria pays to issues that relate to the needs of specific investors and projects already in progress and how to meet those needs.
To them, creating policy incentives that will spur investments is a critical way to go about it. The argument proceeded to the level of tariff. In their opinion, unless Nigeria puts in place a cost reflective tariff, she will not be able to have the kind of investment the country wants
As a solution to poor infrastructure financing, the experts also suggested a significant reduction in the level of opaqueness in public procurement and called for the establishment of a framework for private contractors to borrow against a contract. This was just as they urged ministries to spend more time developing contract that private capital can relate with.
We agree with the argument that government financial sources alone will not be able to carry, in a meaningful way, the infrastructure needs of the country. The government itself is aware of this and is facilitating the processes towards the expansion of its sources of funds through the issuance of bonds and the diversification of the economy as well as the introduction of Voluntary Asset and Income Declaration Scheme (VAIDS) designed to bring more Nigerians into the tax net.
We also agree with the argument that money from government alone is not all that is needed when it comes to infrastructure financing. Policy framework aimed at encouraging and attracting the private sector as strategic partners, in our view, will help in driving the process faster. However, in our opinion, Nigeria has a private sector that insists on being spoon fed. They want the government to literally finance the businesses proceeds from which will go into their private pockets.
Take the issue of power in the country for instance, from day one, the private sector participants have been clamouring for an increase in tariff instead of making efforts to provide services they can cost and sell to consumers as is the procedure elsewhere. It is not the case that the government is making it difficult for private sector to thrive in that sector, for example.
It is actually the case that political consideration was applied in the unbundling of the power sector. Those who are used to free government money took over the sector and the effect is what everyone is suffering. We make this observation following the record set in other areas, such as telecommunication.
The government only put in place the regulatory framework and the rest was easy for investors and in no time, they recouped their investments in multiples. Beyond policy, government did not give any of those network providers any facilities as they are giving to the power sector and yet nothing is working. Nigerians keep getting outrageous bills for services not provided. Nigeria needs the participation of the private sector to actualise its aspiration in the infrastructure sector of the economy. But what is happening in the power sector must not be repeated.