Jonathan a barrel oil in the international market was over $100 and by
the time President Muhammadu Buhari assumed the mantle of leadership, as
the President and Commander in Chief of the Federal Republic of Nigeria
in 2015, a barrel in the global market had slumped to about $30 or even
less and since oil is largest revenue earner for the Nigerian State, how
to effectively managed the national economy and provide the necessary
infrastructure became a monumental challenge, this as coupled with the
fact that the economy was in a recession, occasioned by past years of
economic and financial mismanagement as well as well documented
evidences of widespread corruption.
It is therefore very alarming and worrisome that when President Buhari
became came to power, he noticed a very wide infrastructural chasm; it
is not that the previous government did not embark on infrastructural
efforts, but the work done did not match the inflow of funds during the
period in question. And, infrastructural development has a formidable
nexus in actual development of any nation state.
President Muhammadu Buhari recently in Abuja called for more concerted
effort, creative and innovative ideas from the Nigerian Society of
Engineers (NSE) in reversing the infrastructure deficit in the country,
saying “Nigerian problems require uniquely Nigerian solutions’’.
President Buhari, who received a delegation of the NSE led by the
President, Council of the Nigerian Society of Engineers, Adekunle
Mokuolu, said reversing the deficit will require indigenous capacity,
noting that the government has deliberately structured policies to
favour more local content and capacity development. “The foundations
of any developed, competitive and prosperous society are based
on good education and quality infrastructure. Many nations we look up to
are those with adequate and accessible infrastructure, power and water
resources. “They achieved these by embracing engineering and of
course, engineers. Over the years, Nigerian engineers have been
recognized globally for carrying out amazing and impactful projects.
Unfortunately, this is not the case here at home as for decades, the
enabling environment was simply not provided for these innovative and
creative professionals to flourish and showcase our country as an
engineering hub,’’ he said.
The President urged the professionals to look inward in showcasing their
knowledge and skill in a way that will directly impact the nation. “In
the past four years, we focused on reversing this trend by introducing
policies that will create the enabling environment for engineers to
succeed and thrive. “We introduced Executive Orders and
embarked on several infrastructure development and
rehabilitation projects. As a Government, we also prioritized local
content in our procurement processes,’’ the President added.
President Buhari asked the engineers to continue to support Government
at all levels to build a more prosperous society.
It is also imperative to underscore the fact that, the Federal
Government has introduced three alternative funding sources to tackle
road projects. The Controller of Works in Lagos State, Mr Adedamola
Kuti, made the disclosure in Lagos. “The first type of alternative
funding source is the Sukkuk, which is a type of Islamic loan with
almost 0% interest rate. ” The loan does not only have minimal
interest rate, it is also very affordable. It is very attractive to the
government. “Though no project in Lagos has benefitted from it, the
Federal Government has picked 25 roads nationwide across the six
geopolitical zones to benefit from the loan,” Kuti said.
He said that the first tranche of the Sukkuk funding released to the
government was N100 billion, adding that this sum was divided equally to
projects across the six geopolitical zones. According to the controller,
projects in the South West benefitting from the funding are the
Ajebandele-Sagamu Road and the Oyo-ibadan Road. According to Kuti, the
second source of funding is the National Sovereign Investment Authority
(NSIA).
He said that five critical projects in Nigeria were benefitting from the
special funding in hard currency. “The projects benefitting from the
funding include the Lagos-Ibadan Expressway, Abuja-Kaduna-Kano Road, and
the Second Niger Bridge. “A section of the East-West Road from Oron
to Eket and the Mambilla Plateau Electricity Project are also under the
NSIA funding.” Kuti said that the third alternative funding source
introduced was the Tax Credit Scheme. “The Apapa-Oworonshoki
Expressway project is under the scheme, where an investor has been
identified, i.e Messrs Dangote. “This road is the beginning of the
Lagos-Ibadan Expressway,” he noted.
According to the controller, under the scheme, an investor advances the
government its tax for a specified number of years. “This advance tax
is used to fix roads,” he said. “It is a win-win situation for
everybody. The investor protects his investment in the chosen area,
business begins to boom. ” A lot of people have been complaining that
businesses are failing due to bad roads,” the controller said. The
controller said that hitherto a lot of projects had been having
difficulties getting appropriate funding for their implementation.
The Federal Government has also said the nation would need a whopping
$166 billion to meet its energy and transport infrastructure requirement
over the next five years. Transportation Minister, Rotimi Amaechi, who
revealed this during a public hearing on Nigerian Railway Authority Bill
and National Transport Commission Bill, said the Federal Government and
General Electric (GE) have an agreement to commercialize the Lagos-Kano
railway project. “Besides privatization, government also realized a
monumental infrastructure deficit which as at 2015 stood at over $3.05
trillion in 30 years or $166 billion in five years with energy and
transport infrastructure taking more than 50 per cent of that need,”
the Minister said. “Transport infrastructure alone needs a whopping
$50.9 billion in five years to cover the current gap in the sector, an
average of $10.2 billion per year. Currently, the ratio of funding in
the sector between the public and private is 9:1. This constituted a
major disincentive to private sector participation in the industry.
“In addition, it is considered imperative to intimate this Committee
that full government ownership and management of these agencies had
inherent restrictions for third party funding, undue government
interferences; burdensome bureaucratic structures and over-bloated work
force among others,” Amaechi added.
Furthermore, the former Minister of Solid Mineral Development, now the
Executive Governor of Ekiti State, Dr. Kayode Fayemi, lamented the level
of decay of Nigeria’s infrastructure, saying that it will cost the
nation $3 trillion to fix. The Minister said this at a business forum
organized by the Royal African Society in London, the United Kingdom.
Quoting a report by the National Integrated Infrastructure Master Plan,
he said, Nigeria’s current core infrastructure stock gap, based on
international benchmarks, is estimated at $80 billion.
To finance the infrastructural deficits, therefore, the Federal
Government set up a $25 billion infrastructure fund to bridge the
funding gap in infrastructure development in the country, the former
Minister of Finance, Mrs Kemi Adeosun, insisted. According to Adeosun,
setting up the fund became necessary due to the need to upgrade the
country’s current infrastructure, which is in a very sorry state. She
spoke at the inauguration of the 10-year Capital Market Master Plan,
Nigeria Investor Protection Fund, and the launch of the Corporate
Governance Scorecard for quoted companies by the Securities and Exchange
Commission. The ex-finance minister challenged the capital market
community to come up with other innovative ways of mobilizing capital
needed to address the nation’s infrastructure problem. She said, “In
the current environment of significant revenue squeeze and other
budgetary constraints, these investments will clearly not come from
government coffers alone. We believe this is where the capital market
can really make itself relevant by stepping in to close the funding gap.
“Government is already looking to set up a $25 billion fund wholly
dedicated to infrastructure investments. A crucial assignment we have
for the capital market community is to come up with other innovative
ways of mobilizing the capital needed to address Nigeria’s
infrastructure challenge.”
For the former minister, an efficient and vibrant capital market is an
indispensable feature of any modern economy supplying affordable
medium-to-long term capital needed for growth as they facilitate
mobilization of savings, accelerate capital formation, provide
investment avenues and enhance efficient allocation of capital to the
growth of sectors as no country has been able to develop without a
thriving capital market.
In a related development, the Federal Ministry of Finance has unfolded
plans to reposition the Sovereign Wealth Fund in line with the
infrastructure objectives of the federal government. The former Minister
of Finance, Mrs Kemi Adeosun said the sovereign wealth fund is currently
being managed by the Nigerian Sovereign Investment Authority under the
SWF, which had a seed capital of $ 1.55 billion there are three
categories of fund from which investments could be anchored. They are
Future Generation Fund where up to 20 per cent of the fund could be
invested in it, Infrastructure Fund which had an allocation of 40 per
cent, and Fiscal Stabilization Fund which also had a 40 per cent
allocation. She said since budgetary allocations alone would not be able
to address the infrastructure gap as only 30 per cent of the budget had
been allocated to capital projects, there was need to reposition the
sovereign wealth fund to attract more investments in the area of
infrastructure. She said, “The economic blueprint is very clear. We
are going to invest in capital projects to ensure that we diversify this
economy. “We have been talking about diversification since I was a
child and we haven’t achieved that. “What the FG wants to do is
reposition and have it (SWF) focused in line with government’s
objectives which is investments in infrastructure. “The government
realized that even with 30 per cent of the budget earmarked for capital
spending, the country’s infrastructure gap is so wide that government
alone cannot bridge it. “So what we are hoping is that the sovereign
wealth fund now becomes a channel to attract further private capital,
particularly from investment funds abroad. “We really want to focus on
infrastructure – toll roads, bridges, power plants; things that would
help the economy grow.” She said the government is focused on
revamping domestic production as part of efforts to diversify the
economy. Hence, it is very obvious that this government is making all
necessary efforts to really bridge the massive infrastructural gaps in
the country.
The federal government confirmed the approval of the transfer of $650
million (about N198.9 billion) to the Nigerian Sovereign Investment
Authority (NSIA) as seed funding for the newly established Presidential
Infrastructure Development Fund (PIDF). The National Economic Council
(NEC) announced the establishment of the Fund and the disbursement of
the seed funding at the end of its meeting recently. Details released by
NEC showed that the PIDF would be managed by the NSIA. The fund is
expected to be invested in critical road and power projects across the
country. The initial transfer of $650 million to the NSIA was authorized
from the Nigeria Liquefied Natural Gas (NLNG) dividend account at the
Central Bank of Nigeria (CBN).
A statement from the NSIA said the initiative was aimed at eliminating
the risks of project funding, cost variation and completion that have
plagued the development of the nation’s critical infrastructure assets
over the last few decades. Ongoing projects mostly impacted by paucity
of funding include the 2nd Niger Bridge, Lagos to Ibadan Expressway,
East—West Road, Abuja to Kano Road, and Mambilla Hydroelectric
Power.“This commitment by the President and NEC, allows all State
Governments to own an economic interest in the project companies that
will be professionally developed and managed by the NSIA,” the
statement said. “The investments will yield returns, which will
diversify revenues to States, improve the fiscal sustainability profile
of the Federation and ensure Nigerians benefit from modernized
Infrastructure for decades to come,” it added. The NEC said the PIDF
would help secure counterpart funding required for projects being
co-developed with China Export-Import Bank and China Development Bank.
The NSIA said any additional funding required from development partners
for projects in the country would be mobilized.
Besides, President Muhammadu Buhari, in Abuja, reaffirmed that his
administration will sustain the delivery of quality infrastructure
across the country for investments and businesses to thrive. Receiving
representatives of Trade Associations from the 36 states and the FCT led
by the National Coordinator, Prince Paul Ikonne, President Buhari
pledged that he will continue to do his best to ensure that the country
is safe and secure for everybody.
To further exemplify the commitment of the Federal Government to
infrastructural development, it set up the North East Development
Commission to development the whole of North East that was ravaged by
the menace of the Boko Haram insurgency by providing qualitative
infrastructure in the geo-political zone. Similarly, the government put
in place a comprehensive plan of action to genuinely and lengthily build
up the Niger Delta region, after years of deliberate neglect, in spite
of persistent protest from people of the region.
Just to mention a few of the many infrastructural efforts have carried
out; these are Gwoza – Damboa – Goniri – Ngamdu Road in Yobe/ and
Borno States by Hajaig Construction Nigeria Ltd at the cost of N34.6
billion as well as the rehabilitation of Mayo Belwa – Jada – Ganye
– Toungo Road in Adamawa state by Messrs Triacta Nigeria Ltd. at the
rate of N22.7 billion.
Other contracts approved are Ado – Ifaki – Otun – Kwara State
border in Ekiti State at the rate of N6 billion, the repair of Makurdi
bridge in Benue State by Messrs AG Vision Construction Ltd.N4.7 billion,
Ihugi – Korinya -Wuse -Ankor in Benue State was given to Datum
Construction Ltd at the cost of N15.6 billion.
Also, approved was Gbagi – Apa – Owode in Badagry Lagos State to
Messrs Smithcrown Nigeria Ltd at N4.4 billion, and the Construction of
Ijebu Igbo – Ita Egba Owonowen in Ogun and Oyo state to Messrs DC
Engineering at the cost of N9.8 billion and the Dualisation of Jattu –
Fugar – Agenebode road in Edo Phase II by Mothercat at N7.5 billion.
There was also an approval for Makurdi – Gboko – Wannune – Yander
Section 1 in Benue State to Messrs Rockbridge Construction Ltd. at the
rate of N18.6 billion, Old – Enugu – Port Harcourt Road at Agbogugu
– Abia border Spur by Messrs Setraco Ltd. at N13.9 billion,
Rehabilitation of Umulungbe – Umoka road at N6.2 billion, Amokwu –
Ikedimkpe – Egede – Opeyi Awhum Road in Enugu State to Messrs IDC
Construction at N21.7 billion and the rehabilitation of Nkwu Inyi –
Akpugoeze in Anambra State awarded to Anbeez Services at N2.6 billion.
Sabon Birnin – Tsululu – Kuya – Maradi Junction road in Sokoto by
Messrs China Zhonghao Nigeria Ltd at the cost of N4.4 billion.
President Buhari, however, stated that the government would continue to
work on the country’s road network as well as other infrastructures
and stressed that his administration had raised the country’s
budgetary commitment for capital projects from 15 per cent to a minimum
of 30 per cent. He stated these in Abuja at a one-day public
enlightenment forum on developments in the road sector. The forum was
organized by the Federal Ministry of Power, Works and Housing.