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Infrastructure —
Atiku Abubakar

Talent and creativity are Nigerias greatest asset, the youths
hopes and aspirations will shape our nations future.

Sound infrastructure and adequate power are essential for stimulating economic growth and development in any nation. Not only do they help to determine the success of manufacturing, industry and agricultural activities, they are also vital for improving the lives of people through improved delivery of health care services and education. Good infrastructure also supports social and cultural advances and leads to an over-all lowering of rate of poverty in a society.

It is therefore imperative that a strong infrastructure development drive is pursued in order to stimulate the necessary development. Aggressive infrastructure development has always been a precursor to any form of sustained economic development especially in emerging economies, like Nigeria. It is evidenced by the trajectory of development experienced by countries that have consciously pursued sound infrastructure investments as a key driver of their economic development.

Poor funding and chronic underinvestment by successive governments has crippled the state of Nigeria’s infrastructure. Over time, this lack of funding has left Nigeria with an annual funding gap in excess of N15 trillion (USD 10.5billion) in infrastructure development. As such, infrastructure spending of about 12 percent of GDP will considerably improve infrastructure development without posing any significant risk to overall economic growth. Also, in seeking investment in infrastructure, Nigeria has a considerable advantage due to its high rate of ‘Return on Investment’ (ROI); the highest in Africa.

Road

Whilst high traffic volumes characterize Nigeria’s extensive road networks, only 15.3 percent of the 195,200km of the road network in Nigeria is adequately tarred and motor-able. Out of this only 67 percent of tarred roads are in good or fair condition in comparison to other resource-rich nations in Africa. Nigeria’s spending on road construction and rehabilitation falls significantly short of its peers. Only $50 million a year is allocated to preventative road maintenance compared to benchmark of $240 million a year in other African resource-rich countries.

Seaports

Whilst there have been considerable developments recorded in the Nigerian Ports, performance remains poor by global and even African performance standards. The performance fell short of comparator countries in various parameters of measurements such as container-dwell-time, truck cycle time and crane productivity. The concessions that followed the reforms embarked upon in the sector realized over $716 million. The intention was to use the proceeds for capital investments in the sector. However, so far, it has failed to deliver on the expected infrastructure upgrade, improved efficiency and streamlining of imports and exports. The sector is still characterized by various broad-based challenges ranging from congestion to backlogs, delays, corruption and poor customs performance.

Airports and Aviation

The Nigerian aviation market has increased substantially in recent years mainly due to the dramatic expansion of domestic services. Nigeria is also one of the few countries whose safety oversight record is considered good enough for the USA to allow direct flights into the country. However, these milestones have not been followed through with commensurate interregional connectivity and infrastructure development. As such, the sector has not been able to live up to its potential. Also, the country has yet to enable an airport such as Lagos, given its size and strategic location, secure its place as an air transport hub for the region. On the eastern and southern part of the continent, a strong regional hub structure has developed around Johannesburg, Nairobi and Addis Ababa. However, none currently exist as yet for West Africa. The Lagos airport has the potential to fill this regional gap. However this has yet to be fulfilled due to the lack of adequate reform in the sector.

The Voice We Deserve

Within The First 100 Days:

The Presidency through the Federal Ministry of Finance (FMF) and Federal Ministry of Works (FMW) will co-finance and/or underwrite critical PWPs under the watchful eye of an independent monitoring arrangement that ensures that programmes do not:

Within 1 Year

The Presidency through the Federal Ministry of Finance (FMF) and Federal Ministry of Power (FMP) will encourage private investments in distributed co-generation assets that feed more than 2MW into the grid by:

  1. Adopting and implementing Small Dispersed Power Production Initiatives
  2. Fine tuning and pursuing the accelerated implementation of the “Gas to Power” Masterplan drawn up in 2005.
  3. Offering tax breaks or more favorable depreciation rules.
  4. Matching private investments to meet set location adjusted prices per Mwh
  5. Nudging SGs to compete on infrastructure delivery
  6. Diversifying the ‘Energy Mix’ with greater emphasis on coal for power generation using the Clean Coal Technology (CCT)
  7.  Accelerating the privatization and decentralization of the Transmission Company of Nigeria (TCN)
  8. Encouraging the creation and spread of industrial clusters and improving rural electrification.
  9. Partnering with private sector providers in the provision of appropriate infrastructure along critical trading corridors such as the Lagos-Kano Jibiya (LAKAJI) corridor.
  10. Offering SGs competitive rewards for identifying, prioritsing, and seeing through up to three needcentered high level infrastructure development projects.
  11. Addressing the availability of Gas to power plants by:
  • Re-injecting flared gas or scrubbing
  • Encouraging the gathering, harnessing and transmitting gas to power plants
  • Implementing effective Price Mechanisms by incorporating Gas Sales Aggregation Agreements
  • Reviewing the penalties for IOCs for gas flaring
  • Creating a domestic gas company as a way of stimulating and stabilizing the gas supply industry

Within 2 Years

Reward Infrastructure Maintenance.

The Presidency, through the FMF and FMW will improve infrastructure by:

  1. Using standardised performance-based construction & maintenance contracts for federally funded infrastructure projects
  2. Adding non-fungible maintenance funds to capital budgets
  3. Creating a hotline to allow citizens to signal shoddy maintenance of federally funded infrastructure

Within 4 Years

The Presidency through the FMF and FMW will offer SGs competitive rewards for identifying, prioritizing, and seeing through up to 3 need-centered infrastructure development projects worth up to N1bn each at any one time.

By The Year 2020

  • The Presidency, through the FMF will Offer LGs performance linked block grants that allow them to implement labour- intensive growth initiatives, with guidance that prioritises:
  1. Fixed asset creation
  2. Projects that confer transferable skills
  3. Entrench local ownership of developmental job creation initiatives
  • For railways development, the Federal Government will:
  1. Faithfully implement the Railway Development Blueprint (25 Year Vision).
  2. Restructure the industry.
  3. Separate regulation from operation.
  4. Create an independent regulator.
  5. Pass into law the Draft legislation for railway and transport sector reform
  6. Separate the freight business from the passenger business
  7. Create a National Railway Company as a PPP that takes over all the operational equipment of the NRC on a 25-year concession
  8. Allow NRC to operate and maintain the network of legacy narrow gauge and central line standard gauge
  9. Encourage potential operators for Nigeria rail freight
  10. Create a passenger railway company as a PPP that takes over the passenger operations and available coaches on a concession/management contract
  11. Provide cast iron guarantees to investors
  12. Develop an arrangement where the Passenger Railway Company will obtain and pay for access rights to the freight operator (NRC) who maintains the infrastructure.

Railways

The Federal Government has since 2006 made commitments to the railways totalling in the neighbourhood of N4 trillion naira but the manner it is implementing the 25 Year Strategic Plan for the Railways (i.e the Blueprint) is incoherent and fails to impact the economy as it should and indeed will not provide for a viable and sustainable system. The Federal Government is doing the same thing it has done since independence over and over and expecting to get a different result. Throwing money at a problem does not solve it. Thinking outside the box is required. This would be the last major restructuring/privatization exercise but the most exciting development will be creating a rail freight business. This means containers, petroleum products, cement, cereals and other agricultural products, industrial raw materials and solid minerals such as iron ore, barytes, limestone, fertilizers, steel products e.t.c switching to rail.

The problem of the NRC is that it cannot compete against the dynamic privately operated road sector due to its structure as a nationalised industry. It is an owner, operator and regulator of railways. Just like NEPA and NITEL, the NRC has a culture that does not incentivise entrepreneurship nor efficiency and effectiveness. It needs these attributes to compete effectively against the roads. The World Bank carried out a study in 2006 on the viability of the Nigerian railways and justification for railway rehabilitation. It found that a freight threshold density of 1.5-2m tonnekilometres per annum was required to justify a rehabilitation investment of about $700m. The target was for the railways to take up to 40% of the 15-20m tonne national freight traffic within 2-3 years post rehabilitation. To date, the FG has expended nearly $1bn on rehabilitation but could only haul 100,000 tonnes in 2013 (1% of traffic on Lagos-Kano). Its market share currently is 0.5% of the national freight traffic. It takes in N4bn every year from the exchequer for its current budget, probably earns about N1bn each year which it keeps and spends. It has created very few real jobs, makes no profit and makes negligible impact on the transportation industry. Since 2009, the NRC has not produced annual accounts to the NASS as required by law, so its true financial position is unknown.

At the present time, there are no through rail services between Lagos and Kano due to flooding on the rehabilitated tracks. There are no rail services anywhere on the eastern line between Port Harcourt and Maiduguri either. This is year 5 since the rehabilitation began and 12 years since the 25 Year vision was adopted.