Nigeria need $14 to boost infrastructure

Nigeria needs an annual investment of $14 billion
to boost infrastructure in the country, Dr. Ngozi
Okonjo-Iweala, Coordinating Minister for the
Economy and Minister of Finance has said.
The minister said this at the Public Private
Partnership (PPP) stakeholders’ workshop
organized by the African Development Bank
(AfDB), in Abuja,on Monday.
“To fund infrastructure, Nigeria needs about $14
billion every year, out of which $10 billion should
come from the federal level. And this estimate is
not comprehensive because it is likely to be
higher when the total financial outlay needed to
fund the Infrastructure Master plan is calculated,”
said okonjo-iweala.
“Currently the country’s spending on
infrastructure is about $6 billion, so there is a big
gap that needs to be filled. We are talking about
something in the region of $8 billion. That is why
PPPs are very important to Nigeria at the
moment”.
The minister stressed the need for continued PPP,
as she noted that the government cannot do it
alone. She however noted that some of the PPP
arrangements of the past were bogged down by
certain inadequacies in the frameworks of the
deals, hindering their progress. She therefore
recommended that PPPs be reviewed in so as to
deliver desired benefits.
“We need to improve the PPP model to ensure
that it suits the country’s needs, delivers clear
benefits without leaving us with difficult
problems.
“One of the problematic areas is the amount of
time needed to complete a PPP project. On the
average, according to studies, it takes seven years
to complete a PPP project in Africa. This is too
long! For policy makers and political leaders who
are operating on a four-year term, seven years to
deliver a project which they have promised the
people is not very attractive.
“The difference in time horizon between policy
makers and technical partners needed to be
reduced. PPPs need to be processed faster. In
other words, we need better financial, legal and
regulatory capacity to achieve faster results.
“Another issue, which we have observed is that
there is s tendency to make legal requirements
too complicated and load every risk on
government to the benefit of investors who walk
away with rewards at virtually no risk.
Government alone can’t bear all the risk. The
risks need to be shared to make the project fair
and sustainable.
“Besides, the rate of return expectation of
investors tends to be too high and this is
reflected in unsustainably high costs of PPP
projects. Sometimes it is as high as 30%. The
consequence is that tolls are too high and the
public understandably becomes hostile to the
project and this leads to all kinds of problems.
“There is therefore a need to have a right
financial and economic framework which will
ensure that investment is profitable but also
benefit consumers and the economy,” Okonjo-
Iweala said.
The AfDB Director in Nigeria, Dr. Ousumane Dore,
while speaking at the event disclosed his
organization’s decision to establish a PPP Hub in
Nigeria to assist the nation and others in the
West-African Sub-Region in their efforts at
attracting private funds to infrastructure
investment.
Some PPP projects such as the Lekki Deep Sea
Port, the Onne Port in Rives State, Lagos-Ibadan
Expressway, Second Niger Bridge have already
commenced, according to the Finance Minister,
who added, “we need much more because our
needs are so great”.