The future of public-private partnership in Nigeria

The present administration came to power with a kind of messianic complex and a rock solid belief in a socialist state-led development model. Despite the usual electoral promises to the private sector, it is clear to all now that the president had the same mindset he had in 1984/85 where the state must retain the commanding heights of the economy, the global ascendancy of liberal capitalist democracy notwithstanding. It didn’t matter to him that these policies failed back then and are no longer in vogue. He obviously believed them and blamed their failures on others or other factors and not in the policies themselves – that is if he ever believed that they failed in the first place.

The administration’s current stubborn refusal to remove fuel subsidy, liberalise the foreign exchange market, privatise laggard, economically unviable and decrepit national assets and institutions, and open disdain for and refusal to engage the private sector in providing badly needed public infrastructure comes to mind.

However, the crash in oil prices and the declining federally distributable revenue on which the government depends has imperilled the socialist agenda of the government. It is now fairly certain that the government neither has the money to provide the required infrastructure and amenities nor continue to control the commanding heights of the economy as envisaged when the country was still a petro-dollar state.  The government was forced, against its judgement, to increase the price of fuel and partially float the naira because of forex scarcity. All of a sudden, the idea of public private partnership in provision of public infrastructure that was roundly rejected and scoffed at by this government is gradually being seen as the only viable option for provision of infrastructure in the country. Now the government is being urged and it is indeed mulling the PPP model in the provision of infrastructure.

This is cheering news. It means the government is coming round to accepting the primacy of the private sector in the national economy. But dangers exist. Private capital are not sitting idle and waiting for the government to decide whether it wants them or not. Private capital are highly mobile and above all, prefer a predictable policy environment. But this is where Nigeria is notoriously derelict. Policy inconsistency is the norm here. Every government necessarily dismantles the policies of its predecessor and initiate new ones.

From 2003, PPP became very popular in Nigeria with all levels of government mouthing rhetoric of collaborating with the private sector in almost everything. The federal government even went a step further in 2005 by passing the Infrastructure Concession Regulatory Commission Act (ICRC). However the country’s landscape is littered with many failed PPP or concession projects such that investors are now weary of the country and may no longer be prepared to investing in Nigeria. One of such flagship PPP project was the Lekki-Epe Expressway concession. The contract, signed in 2006, was seen to be working until it ran into controversy and was eventually bought back by the Lagos state government.

Many challenges have been associated with PPP projects in Nigeria. First, there is the real fear that PPP projects do not outlive the governments that initiate it. This is true in most parts of the country. Second, government or government agencies’ impunity and disregard of the law courts posed another layer of danger for PPPs. Despite several court judgements, for instance, the Federal Airport Authority of Nigeria (FAAN) terminated a PPP contract signed with Maevis Nigeria Limited and has continued to ignore all court judgements to this day. Similarly, the government, in 2012, terminated the concession agreement between it and Bi-Courtney over the Lagos-Ibadan Expressway.

With these antecedents, it will be difficult to attract private sector funding for public infrastructure projects in Nigeria going forward. The government must therefore go beyond mere expression of interest to partner with the private sector. It must carry out real reforms; enact laws, empower the ICRC, ensure respect for and obedience of court judgements etc. Furthermore, the past practice of signing very shoddy and lopsided PPP contracts only to discover along the line their errors and begin to push for cancellation can no longer work. Public officials must be thorough and efficient like their peers in the private sector and must be made to respect the sanctity of signed contracts. Sadly, the gross inefficiencies and shoddiness of past government officials is still present or has even gotten worse now.

For now, the hope for the development of a solid framework for PPPs is still a long way off. Perhaps, maybe, when the cash crunch continues to bite, the government may become serious and move to establishing a solid framework for PPP in Nigeria.