NIGERIA REQUIRES N2.25TN ANNUALLY TO IMPROVE INFRASTRUCTURE - ICRC
The deplorable condition of most infrastructure in the country is a source of embarrassment to the government and the citizens. A document by a government agency notes that Nigeria will require massive investment over the years to solve the problem, EMEKA EZEKIEL writes.
The deplorable condition of Nigeria's infrastructure requires that the Federal Government must spend N2.25tn ($15bn) annually to improve it to an acceptable level.
This level of expenditure is contained in the latest report on the state of infrastructure in the country, a copy of which was obtained by our correspondent from the Infrastructure Concession and Regulatory Commission in Abuja.
The huge gap in infrastructure is easily noticed in critical sectors of the nation's economy such as power, transportation, education, housing, water supply and health.
'Nigeria suffers from a huge infrastructural deficit spanning numerous sectors such as transportation, power, water supply, education, housing and health. It is estimated that at least $12bn to $15bn per annum is required to bridge this deficit,' the report stated.
The Director-General, ICRC, Mr. Mansur Ahmed, confirmed the content of the report in an interview with our correspondent on Friday.
Nigeria aspires to be one of the 20 leading economies in the world by the year 2020, with a Gross Domestic Product Growth target of not less than $900bn and a per capita income of $4,000 per annum.
But owing to poor infrastructure, the country is poorly rated in the business environment and the global competitiveness index.
The high cost of doing business due to poor infrastructure has impacted negatively on the nation's economy as investors seeking greener pastures have been relocating to neighbouring countries even as mortality rate for industries, especially Small and Medium-Scale Enterprises, has been on the increase in the last few years.
According to the First Vision 20: 2020 Medium Term Implementation Plan, the dearth of critical infrastructure is a major constraint to achieving Nigeria's desired economic growth and development.
The document noted, 'Poor infrastructure is one of the major constraints to economic development through its debilitating impact on productivity, investment in-flows, competitiveness, cost of doing business and people's confidence in the government and the economy.
'Achieving the GDP target by 2013 is directly linked to the ability to overcome the infrastructure challenge and lay a solid foundation for growth and sustainability in priority sectors of the Nigerian economy.'
However, Ahmed told our correspondent that the Federal Government would not be able to raise the required capital to finance the huge infrastructure projects critical to the actualisation of the Vision 2020 development plan.
He disclosed that the agency was exploring the opportunity of raising funds from the International Islamic Bond Market for the development of infrastructure in the country.
He explained that ICRC's decision to raise funds from the Islamic bond market was bolstered by the remarkable achievements recorded by some developing and developed countries that had embraced the non-interest finance option for the provision of infrastructure.
He said, 'Islamic finance is particularly suited to public-private partnership for the purpose of infrastructural development. In recent years, Islamic finance has grown rapidly around the world, conservatively estimated at 10 per cent to 15 per cent per annum, and poised for a robust growth in subsequent years. As at 2010, the estimated value of global Islamic finance assets exceeded $1tn and is expected to grow to about $4tn over the next three years.
'The importance of Islamic finance cannot be overemphasised in providing financial stability and fostering economic growth as it promotes equity, justice and fairness in financial transactions. We believe that critical imperatives for the successful issuance of a Sukuk in Nigeria will include the right regulatory and taxation framework, transparent transaction structure, credit rating, marketing, risk and mitigation measures, appropriate technical capacity and guarantees.'
'As regulators, we will help frame and direct these key imperatives as a way of providing the necessary clarity that will enable the Sukuk Project Team to focus on the key operational issues, challenges and project management plan that will be required if we are to meet our ambition of achieving a world- class infrastructure in the short to medium time frame,' he added.
Government's attempts at providing critical infrastructure to drive industrialisation, economic growth and development have been stymied by massive corruption and subversion of due process in the award and execution of projects.
According to the report of the Presidential Projects Assessment Committee on Federal Government projects, 11,886 infrastructural projects embarked upon by the government have yet to be completed due to subversion of due process by ministries, departments and agencies of government, resulting in avoidable loss of billions of naira.
Specifically, the report stated, 'There are 11, 886 ongoing capital projects being executed by the Federal Government. The estimated cost of these projects is N7.78tn. Out of this amount, N2.69tn had been paid to contractors. However, there is evidence of large scale and widespread institutional mediocrity, deficiency of vision and lack of direction in the project management. This has resulted in avoidable losses of billions of naira.
'In addition, corruption in the handling of projects by many self-seeking and inept public officers and contractors has led to massive inflation of costs and undermined the legitimacy of their monitoring and supervision responsibilities. There was subversion of the normal project cycle. The committee established that almost all ongoing projects have not been subjected to, and taken though the normal project conceptualisation, planning, design and procurement, contract execution and maintenance stages.'
The report further noted, 'There were numerous cases where the process of selecting contractors for a bid appeared to have subverted the procurement process. There are also cases of revocation of 'No Objection Certificates' issued by the same body without any clear justification.
'There were also cases of disqualification of duly pre-qualified contractors in questionable circumstances, including the mutilation and substitution of bid documents, thereby rendering such bids non-responsive. In many situations, contractors were allowed to draft agreements, which, not unexpectedly, they did in their favour against the Federal Government.'