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New transport policy: A lesson in self-indictment

By The Citizen
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By Fubara Dorte
With the announcement by the Federal Government, early this year, that it was putting together a framework that would form the bedrock of a new transportation policy for the country, we need not look any further for the reasons for the failures of recent attempts at Public-Private-Partnership (PPP) to develop some of our public infrastructure.

There might also be no need for further argument over who is to blame for the foreseeable failure of nearly all major Private-Public-Partnership (PPP) projects in the country.

It is no surprise then that all previous attempts by the Federal Government to redevelop or upgrade any of the nation's critical infrastructures have met their waterloo even before they took off. All, perhaps, except for the domestic terminal of the Murtala Muhammed International Airport, Lagos (commonly called MMA2), which, today, stands as the only completed major PPP project in Nigeria.

But the MMA2 is not without its own problems, which this article will deliberately avoid discussing, in order not to distract from its fundamental concern and focus.

With the revelation by the Federal Government, a few things are immediately apparent. Among them is the unmistakable admission of total ineptitude in its implementation of the PPP model.

What the Federal Government is saying, in essence, is that it had wittingly put the cart before the horse by adopting the PPP model without first and foremost putting together an institutional and legal framework, which would have served as a roadmap for all parties and also safeguard their investments.

The government also admitted that it had, hitherto, been groping in the dark, while pretending to be implementing a well rehearsed policy that would ensure the revival of our decaying public infrastructure.

Now, let us examine some details of the proposed policy.

Media reports quoting the Minister of Information, Mr. Labaran Maku, revealed that the Federal Executive Council, at its meeting on March 12, commenced discussion on four proposed executive bills seeking to further reform the nation's transport sector.

The titles of the proposed bills are, the National Transport Commission Bill (2014); Nigeria Railway Bill (2014); Nigerian Ports and Harbour Authority Bill (2014); and the National Inland Waterways Authority Bill (2014).

The bills are to be revised by a committee chaired by the Attorney-General of the Federation, Mr. Muhammed Adoke (SAN) and, thereafter, sent to the National Assembly for consideration.

According to Maku, the proposed bills became necessary following certain considerations by the government, chief among which was the need to encourage greater participation of the private sector in the development of transportation infrastructure by eliminating the several legal bottlenecks that have constituted major hindrance.

The reports specifically quoted Maku saying: 'While considering the bills, the council took into consideration that for long, the transport sector had not benefited from the private sector participation efforts of the government. The reality was that countries could no longer depend on government annual budget to build roads, ports, railway and airports as well as fund them.

'Private sector leads to faster growth of the economy. Government no longer has enough resources to run infrastructure. There must be private sector participation. We have discovered that there are so many legal bottlenecks that hinder private sector participation, hence the bills.'

Very well said, but the point must be emphasised that it is absolutely impossible for any country to experience economic growth without a strong and viable real sector. It is, of course, a no brainer that real sector growth depends entirely on the unhindered participation of private investors, both local and foreign, in economic activities.

It has been estimated that Africa needs up to $100 billion a year to reverse its huge infrastructure deficit, especially transport networks, power generation and water supply. This will no doubt require long term financing that is now very scarce.

It has, therefore, become an imperative for governments, serious about attracting long term investments to their economies, to concentrate efforts on creating the right conditions and environment. And this cannot be achieved through endless rhetoric, but only through deliberate actions that signify genuine commitment to the promotion and protection of free enterprise.

And how best do you judge a government, save by its antecedents? It is in this regard that I submit that the Nigerian government has failed woefully. Or how does a potential investor view a government that preaches private sector participation in infrastructure development with one side of its mouth and uses the other side to support spending public funds in upgrading and remodelling airport terminals across the country and setting up a national carrier?

What about the still unresolved issues surrounding the concession agreement on the all-important Lagos-Ibadan Expressway with a consortium of private investors? What could be the rationale for entering into an agreement on a strategic public infrastructure with innocent investors when the government was aware of the absence of a policy framework to support such an exercise?

It got worse when this same government, which should, ordinarily, look for ways to protect and encourage such investors, chose, rather, to use them as sacrificial lambs or guinea pigs.

The admission by the Federal Government that there were no policy framework and legal foundation for the adoption of the PPP model has also lent credence to the insistence of the company that won the concession for the reconstruction of the Lagos-Ibadan Expressway, Bi-Courtney Highway Services Limited, that the government was largely responsible for the prolonged delay in commencing the project.

It seems to me that the government has, inadvertently, created further grounds for Bi-Courtney to challenge the legality of the revocation of the concession agreement. We, however, need not dwell on this point as the company has shown in the past that it was quite capable of fighting its own battles.

Equally, this admission by the government validates the submission of its very own Infrastructure Concession Regulatory Commission (ICRC), which concluded that the Federal Government, more than anyone else, should bear the blame for the failure of the Lagos-Ibadan Expressway concession agreement, just like other PPP projects.

The ICRC's position, contained in its 2011 report submitted to the Presidency, noted that the implementation of the project was delayed due to various issues that were not addressed prior to the execution of the agreement.

The report also revealed that the Federal Government did not grant the approval for a final design of the road until May 10, 2011, two years after the concession agreement was signed.

But, apart from formulating policies that are favourable for investment, the antecedents of a government are also critical in gaining and sustaining investors' confidence. And how best can you determine a government's antecedents if not through its demonstrable and dispassionate willingness to obey its own laws.

It is clear from experience that investors are motivated only by profit and will naturally gravitate to where they feel their investment is most secure. Also lessons from other climes have shown that self-supporting profitability, completely devoid of either official patronage or interference, provides the entrepreneurial force and the absolute autonomy that make the development of the real sector possible.

Therefore, any government that wants to sustain real sector development might want to spend less energy subsidising artificial prosperity and more resources making its environment attractive to investors, promoting the rule of law, and protecting the right to private property.

Fubara Dorte, a project analyst, is based in Port Harcourt.