NIGERIA NEEDS $4BN ANNUALLY FOR INFRASTRUCTURE DEVT- MARIE FRANCOISE MARIE-NELLY
As the nation needs $4 billion per year to fix its infrastructural problems, the World Bank is running along with the government to connect roads, increase power capacity and boost agricultural production in the country. According to its Country Director in Nigeria, Ms Marie Francoise Marie-Nelly, the bank is currently executing projects that can bring sustainable development in the country. In this interview with an on-line publication, she talks on various issues that affect the nation's economy and proffers practical approaches to tackle them.
Nigeria has an annual budget of about $30 billion for the Federal Government. If you add the amounts that go to the states, you are almost close to $70 billion. The contribution of the World Bank annually is around $4.5 billion, the contribution of the development partners in this country is only about 5 per cent. It is unlike some other countries like the DRC (Democratic Republic of Congo) where the contributions of the partners represent about 40 per cent of the budget. Secondly, you know that the World Bank re-engaged with Nigeria in the early 2000, so if you look at our contribution in 2003 we had less than $600 million, we moved to $3 billion in 2006 and today our portfolio is about $4.5 billion.
Investments in Nigeria
Nigeria's portfolio in the Africa region is the largest one at the moment. We have $4.2 billion in the portfolio for country projects and we have another $200 million for regional projects, because the bank invests more and more in multinational projects. So, when we add the country window and the regional window we have about $4.4 billion. Out of that, you have 40 per cent that has been disbursed already and 60 per cent that is yet to be disbursed. Projects come on stream and take six to eight years to fully disburse. Out of our portfolio, you have 54 per cent that is sustainable development.
What do I mean by sustainable development? You have not only the infrastructure itself; roads, energy, water, but also agriculture and urban development. Then we have human development, meaning health, education and social protection, representing 33 per cent. We have $900 million in health to address general health sector issues, also malaria, polio and HIV/AIDS. The rest of the portfolio covers programs to strengthen governance and promote private sector development as discussed above.
The World Bank has invested about $20 million into solid minerals in Nigeria, for processing precious stones and other solid minerals. It is quite an opportunity to explore. There is also potential for activities in the tourism industry in every state in Nigeria. So, there will be a need to develop a comprehensive tourism strategy. For example, a country like Rwanda generates 30 per cent of its resources from tourism. They have gorillas, and have been able to organize the visits to the gorillas, and have set up the proper infrastructure around the sites. There is a potential for tourism but it has to be very well organized.
Impacts on economy
What the World Bank has done in Nigeria is quite significant. The transport conditions have changed in Lagos, with the Lagos Metropolitan Area Transport Authority (LAMATA). That was done with the support of the World Bank. As a result of this program, 200,000 passengers in Lagos can move easily, go to work, reduce pressure because the traffic time has reduced considerably, to the extent that we actually have a second tranche of US$200 million that we are doing now jointly with other partners such as the French Development Agency.
We have at the moment an important programme which is called Federal Roads, which has started to pick up, I must say we had difficulties at the beginning, now we supporting the rehabilitation of a number of segments, including the Enugu - Abakaliki Road and the Ogoja Junction - Ikom Road. Again, these two road sections complement two separate road sections that are being rehabilitated under an AfDB funded project as part of the 'Nigeria-Cameroon road corridor between Enugu and Bamenda. ?A study which the World Bank completed a few years ago shows that Nigeria would need to invest about $4 billion per year over a 10-year period to basically reach the level that is needed to support its economic development and position Nigeria not only in West Africa but in Africa more broadly.
The World Bank does have a system in place to monitor and control the programmes which it finances. First, transparent procurement procedures must be applied, then all projects are periodically supervised by our team and finally, there are internal and external auditors. However, there is not point for the World Bank to put in place a rigorous system for the five per cent that we are financing if there is not a strong system for the 95 per cent which represent the government resources.
We encourage the government to first ensure that proper sector strategies are put in place and to improve the budget system so that resources are allocated accordingly to sector priorities and needs. . For example, you don't just wake up and say that you need a road tomorrow morning; either it will be very expensive or the road will be poorly built. Therefore you need good planning, appropriate allocation of resources each year and finally ensure that the budget is executed properly.
There is nothing wrong with borrowing money, I have read about people who say; why do we borrow money? There is nothing wrong in it, but what you should be concerned about is, we borrow to do what? You can borrow, so long as the money is used for productive investments and that you comply with certain ratios. I mentioned earlier that you will need $4billion per year for infrastructure, to connect roads, increase power capacity from 4000 megawatts to 40,000 megawatts.
The point is to do a proper selection of investment, due diligence in terms of implementation to ensure that the project will generate the resources necessary for repayment. Take for instance, if the government should invest properly in power and the power becomes steady, the cost of most products will reduce.Then you will have more growth, you will have employment, then the economy will generate the resources needed to allow for repayment.
The World Bank has several windows. First, you have the International Development Association (IDA) which is our concessional window, and under this window, we usually give grants or credits without interests to very poor countries. Under this window, countries enjoy a repayment period of 40 years with a grace period of 10 years. They don't pay interest, but only a service charge of 0.75 per cent on the disbursed balance and a commitment charge of 0.5 per cent on the undisbursed amount.
The other window which is the International Bank for Reconstruction and Development (IBRD), there we serve what we call medium income countries. And thirdly, we have the private sector window known as International Finance Corporation (IFC), which supports the private sector. Nigeria is still part of IDA and receives interest-free credits. The total external debt of Nigeria is about 2.5 per cent of its GDP which is a very small amount since Nigeria obtained the debt cancellation some time ago. As I said, Nigeria is not paying interest on IDA loans and with the grace period I mentioned earlier, it means that our loans to Nigeria has a grant element of almost 60 per cent.