Mr. Wilson Akhator-Eneka is the Managing Consultant, Algorithm Comm. Ltd, a Research and PPP Development Project & Infrastructure Finance firm. In this interview with ZAKA ABD-KHALIQ, he examines external borrowings in Nigeria and Africa, infrastructural development and finance challenges in the country.
Nigeria has been borrowing from external sources to finance infrastructure projects. In fact, there is hardly a project that government does that it never borrows to finance. What really is the problem here?
Infrastructure is an asset, borrowing to finance infrastructure is good. But my limited experience in Nigeria reveals the following weaknesses: That the so called borrowed funds are not properly utilised. The fund is spread into many projects, we hardly complete any one, and as such they become complete waste. Also, there are no thorough design, development, execution of projects from inception to commissioning and functioning.
It was reported that the last government of Edo State borrowed $250 million to finance infrastructure projects. Is there any project in Edo State tied to this project? And this is a widespread situation across the country. So what is the way out? My humble submission is to take one project at a time, complete it and let it be functional. Some people will say corruption is a problem, yes this may be true, but there is corruption everywhere. Even in the midst of corruption, we can still achieve something if we use experts to execute projects, not portfolio contractors.
Why are infrastructure projects so expensive to execute in Nigeria that we have to borrow to finance at so costly a debt-servicing rate?
Infrastructure is not cheap anywhere. However, one can speak on facts and figures on a specific project. The real problem is the abandonment of project midway. Abandoned project is the most expensive project.
We have heard so much about infrastructure in the governance and media spaces. Why is infrastructure so important for economic development?
Infrastructure encompasses a whole gamut of so many things inclusive of roads, bridges, schools, hospitals, real estate, among others. Recent researches show that infrastructure has both hard and soft components.
Infrastructure can equally be seen as a process through or by which profound activities are carried out. And you asked: why is it so important for economic development?
Very readily, it is self-evident. Society economic activities cannot take place without infrastructure, hence, it is almost impossible to speak of economic development in place of absence of infrastructure. Consequently, it could be seen as the very fabric with which the economic development of any nation is clothed. Literally, without infrastructure, such a nation is naked and exposed to harsh reality of vagaries of nature and this is putting it mildly.
Why do we need infrastructure as a prerequisite or requirement for economic development?
You see, we have to understand what economic development is. Succinctly, economic development ultimately addresses the intersections between people and their ability to meet their daily needs. In order words, economic development does not happen for the sake of it, it is a derived function, a means to an end.
Now, to demonstrate its prerequisitibility, if you have cash crops in Ore, and there is a processing plant in Ogun state to process them, and the seaport is located in Lagos to ship and there is a local market for the bye products in Kaduna; the intersections between Ore, Ogun, Lagos, Kaduna and the cash crop is provided by transport and mobility. If there are no means of moving these crops and no processing plant to covert the products from one form to another, guess what will happen; with respect to these crops, they will simply rot away.
So infrastructure in this case – road and plant are critical; so is the seaport. So, if we take social infrastructure such as hospital or school; again these are derived activities or function or demand. Without a hospital, you cannot have a sound body to engage in production and without a school, you cannot envisage a future with adequate skills to fuel economic activities. In this instance, without economic activities, you can’t possibility speak of development. It’s a vicious circle, but, regrettably, there is no escape route or short cuts; you just must do it – deliberately promote infrastructure in order to project economic development.
However, this is now different with more advanced economy. Right now, they are looking at societal transformations and infrastructure intersections; looking at the concept of optimal or marginal utility of additional infrastructure investment. Understanding the linearity of Infrastructure and societal transformations, in developing economies, remain critical to economic development and growth.
Looking at the development scenario in our country today, are we not putting the cart before the horse? Why are we not as a country, receptive to human capital development?
With respect, many people who speak of infrastructure are only looking at the tiny side of the coin. Infrastructure has a wider meaning than many thought. New researches in this field have demonstrated this. Human capital development is part and parcel of infrastructure, in this case, soft side. And human capital development is predicated on a number of associated factors. To effectively conduct a human capital development; both hard and soft sides of infrastructure are required.
Yes, human capital development remains the foundation of all infrastructure advancement. Yes it is needed, again you couldn’t possibly conduct it, without the hard part of Infrastructure such as schools, books, training materials, among others.
Let us look at the infrastructure landscape in the country today. What is the true state of infrastructure development in the country now?
Permit me to say MM2 started well. Lekki toll gate has to some extent been able to solve some problems and there maybe Infrastructural projects ongoing in the country. About 3 years ago, we conducted economic study to determine the viability of water transport to ease transportation in Lagos. Our findings reveal that Lagos lagoon needs dredging, without which investors are not willing to put their money. Again one was privileged to be associated with some investors (indirectly), who wanted to invest in Dock Yard in Lagos.
I assisted as the lead public private partnership (PPP) adviser on an Africa Development Bank (AfDP) sponsored project on the conversion of 23 moribund centres to six industrial clusters. These kinds of infrastructure accentuate economic development. I am privy to a study carried out on Lagos – Abuja express road which demonstrates that this project can be executed on a PPP model with many societal benefits. Interestingly, one is involved on two major infrastructure projects finance syndication, which when completed will fuel economic growth. And I am sure there are many more across the country.
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