Assessing govt, investors’ role in building infrastructure through PPPs

Population growth without commensurate infrastructure maintenance and development has placed an enormous pressure on most of Nigeria’s existing infrastructure in recent time, especially in big cities such as Lagos.

This situation is worsened by government’s inability to meet the rising demand through budgetary allocation, hence the need for an effective Public Private Partnerships (PPPs) between willing investors and the government.

However, in an emerging economy such as Nigeria, PPPs have sometimes ended in a tussle rather than the expected goal of bridging an infrastructure gap. Analysts estimate that Nigeria’s infrastructure challenge needs as much as N14 billion annually for the next 10 years  to be resolved.

According to the United Nations agency for human settlement (UN-Habitat), Africa has an urbanization growth rate of about 6-7 percent per annum and unless some urgent and drastic actions are taken, over 60 percent of the continent’s population will be living in urban centres by 2025 with the social and economic challenges of the growth of the urban poor and slums

At an international conference on sustainable sources for infrastructure funding in Nigeria recently, stakeholders reasoned that the  government on its own cannot meet the nation’s infrastructure gap, adding that while PPPs remain a more viable option, the government must see itself as a junior partner in progress by restricting itself to strictly providing an enabling environment.

“Our infrastructure challenge can only be addressed through a holistic plan that integrates all the component thesis and we are not far away from achieving that at the moment”, Babatunde Fashola, governor of Lagos State, said while delivering his keynote address at the maiden edition of the Nigeria infrastructure building conference in the state recently, adding that poverty can be addressed through the provision of adequate and sustainable infrastructure.

Citing inadequate power supply in the country, Fashola noted that this costs Nigerians three times much more than they should have paid for such amenity if it was provided, saying that this  underscores the crucial state of power to the economy.

Pat Utomi, CEO, Centre for Values in Leadership (CVL), in his address, stressed that globally there are resources to deliver infrastructure but investors have remained sceptical of infrastructure investment in Nigeria because of the long gestation period.

This, he said, can be tackled through effective structuring to entice investors, noting that  “many of the infrastructure that are required here and are not provided were provided elsewhere because the government was able to structure things and investors perceived some certainties going into those partnerships,” Utomi noted.

Fashola contended that the idea or the kind of infrastructure, choice of institution, the shape and the mode is a function of some important departments of government—that of economic planning, budget, physical planning and urban development—adding that all developments take place in an identified piece of land and the managers of that area must first conceptualize what they want such infrastructure to look like.

To Helen Brume, Divisional Head, Infrastructure & Project Finance, United Bank for Africa plc, Nigeria boasts of an increasing real sector financing opportunities in the power, housing and general infrastructure.

She noted however, that these opportunities are challenged by government’s inability to provide a national infrastructure blueprint, adding that there is unclear legislative, investment and operational framework, lack of institutional framework for PPP project preparation in emerging economies.

ODINAKA MBONU