Tag Archives: Federal

What if they simply kept a low profile on it?

The ruling All Progressive Congress (APC) and the full rank of the Federal Government of Nigeria were in the Southwest of Nigeria to commission a locomotive train.

The picture here shows the Nigeria locomotive train and below is Senegal’s recently commissioned aerodynamic modern rail system.

We are all privy to the myriad of complains that the current administration would easily put forward as reasons for not having all the finance to get Nigeria a simply modern train system. But the question here, why not keep a low profile on the take-off of the route? Why not save the country all the embarassment that went with the formal launch of the route?

What if they simply kept a low profile on it?

The ruling All Progressive Congress (APC) and the full rank of the Federal Government of Nigeria were in the Southwest of Nigeria to commission a locomotive train.

The picture here shows the Nigeria locomotive train and below is Senegal’s recently commissioned aerodynamic modern rail system.

We are all privy to the myriad of complains that the current administration would easily put forward as reasons for not having all the finance to get Nigeria a simply modern train system. But the question here, why not keep a low profile on the take-off of the route? Why not save the country all the embarassment that went with the formal launch of the route?

Nigeria: A Cusory look at the Infrastructure Deficit and the Ease of Doing Business

Nigeria is African’s largest economy with about 190 million inhabitants. After years of positive growth, the economy slipped into recession in the first quarter of 2016 due largely to plummeting crude oil prices. Though the economy has recently come out of recession, massive unemployment, ailing public infrastructure, and corrupt public service, insecurity, widespread poverty, remain major challenges facing the country’s All Progressive Congress (APC) administration. With a disappointing revenue base due to a fall in crude oil proceeds, the administration has remained under intense pressure to make good its campaign promises. Currently, poor budget implementation (across the tiers of government) prevail and public debt is rising. As a result, the government is, increasingly looking to external sources to fund the huge infrastructure deficit as a way of promoting growth.

According to the National Integrated Infrastructure Master Plan (NIIMP) of 2015, the investment needed to meet current infrastructure deficit in Nigeria is put at about USD 3.0 trillion per annum over the next 30 years. The NIIMP estimates that this annual investment would have to rise from the current USD 9-10 billion (about two percent of GDP) to an average of USD 33.2 billion in the medium term (see Table 1 below for a description). The size of additional investment needed to make-up for the shortfall is expected to come from the private sector and Public-Private Partnerships (PPPs) (see Table 2 for a breakdown), therefore, the current administration is placing emphasis on improving the business environment in Nigeria.

Table 1 Infrastructure Concept and Estimated Cost

Source: NIIMP Development Team


Table 2 Private-Public Sector Split on Infrastructure Spending


Source: NIIMP Development Team

Recent efforts at improving the quality of the business environment in Nigeria have been largely concentrated on a select category of regulatory factors which provide opportunities for some quick wins. The major driver of the current administration’s efforts at better ease of doing business has been the Presidential Enabling Business Environment Council(PEBEC), led by Vice President since July 2016. Firstly, reforms to ensure reliable regulations and institutions has led to shorter businesses registration periods through online filing procedures for legally required documents, e-payment of taxes and the integration of initially separate business processes. Secondly, investor protection and dispute resolution mechanisms have made property transfer easier and more transparent through the removal of sworn affidavit for certified copies of the land ownership records. Specific and independent complaint mechanism have also been introduced by making statistics on land transfers publicly available. Thirdly, on reforms to improve project preparation and standardization of contracts now involve online publication of all relevant regulations, fee schedules and pre-application requirements regarding projects. These reforms and the provisions in the National Policy on PPPs (overseen by the National Council for Public-Private Partnerships) are to provide protection and guarantee for private investment in commercially viable projects. Due to these recent efforts, Nigeria is currently among the top 10 most reforming countries on the World Bank Ease of 2018 Doing Business ranking after moving 24 points up the ranking within a year.

In conclusion, the above described quick wins notwithstanding, the massive infrastructure deficit alongside the perennial monetary policy flaws, inconsistent exchange rate management, a less resilient banking sector and absent of supporting structural reforms, still plague the private sector of Nigeria.


Enhancing Private Participation in Infrastructure(PPI): Policy Challenge for Nigeria


Photo Credit: Guardian Nigeria

According to the National Integrated Infrastructure Master Plan (NIIMP) of 2015, the investment needed to meet current infrastructure deficit in Nigeria is put at about USD 3.0 trillion per annum over the next 30 years. The NIIMP estimates that annual investments in infrastructure would have to rise from the current USD 9-10 billion (about two percent of GDP) per year to an average of USD 33.2 billion for the medium term. The size of additional investment needed to make-up for the shortfall is expected to come from the private sector and PPPs.

The country is currently looking at promoting and expanding private participation in infrastructure. Two of the major policy measures that have driven the government’s efforts at improving private investment levels in infrastructure financing include privatization and Public-Private Partnerships (PPPs). The institutional and policy frameworks needed to drive the needed investment in the various sectors have been put in place and are currently running. The Infrastructure Concession Regulatory Commission (ICRC) was established in 2005 to regulate Public Private Partnership (PPP) endeavors of the Federal government aimed at addressing physical infrastructure deficit which hampers economic development. The Commission currently has more than 50 projects (at various levels of completion) under its regulation and implementation across a wide range of sectors and completion periods. On the other hand, the Bureau for Public Enterprise (BPE), is saddled with the overall responsibility of implementing the Nigerian policy on privatization and commercialization. The BPP is the secretariat of the National Council on Privatisation (NCP) which is the highest decision-making body on the formulation and approval of policies on privatization and commercialization. Apart from the activities of these agencies, a number of reforms initiatives are currently being implemented to improve the policy environment for private investment in infrastructure.

As important as the PPPs are to PPI and the government’s resolve to close the infrastructure gap in Nigeria, a number of daunting challenges, especially regarding the policy and regulatory clarity and efficiency still persist. First on the list of challenges is the jurisprudential overlap between the ICRC, BPE and the Bureau for Public Procurement(BPP). The BPP is saddled with the responsibility for Engineering Procurement Construction (EPC) contracts which are entirely financed and regulated by the government, usually through budget allocations. The BPE is, on the other hand, is the regulatory and implementing agency for privatization process through which government cedes its interest or assets partly or fully to private companies. Related to this role is that of the ICRC which regulates procurement process between private sector Project Proponents wishing to partner with government in developing infrastructure, where investment is recouped over time. The broadly similar roles which these agencies play in the procurement processes involving infrastructure has been a major source of conflict and has hampered the smooth delivery of PPP projects in Nigeria. An interim measure was undertaken in 2015 by the Hon. Attorney General of the Federation (AGF) and Minister of Justice via a review of the applicable laws and a subsequent ‘guideline’. The Hon. Minster had prescribed that “…. all concessions made or granted by the Ministries Departments & Agencies (MDAs) or facilitated by the BPE whether or not under the Public Enterprise Act, must be made in accordance with the provisions of the ICRC Act and subject to the regulatory authority of the ICRC”. As soothing as the prescription may sound, it is only a temporary remedy to the perennial conflict that surrounds PPI in Nigeria. Only a legislative intervention, through amendments to existing laws, will suffice as a permanent remedy in this case.   

The second challenge is the weakness of project preparation mechanism PPP projects. Currently, the ICRC has not been able to make critical project preparation guidelines available for potential private sector organizations and MDAs willing to go into PPP projects for infrastructure. Some of the guidelines pending review and formalization include the Outline Business Case Guide; the PPP Procurement Guide & PPP Primer; the PPP Project Appraisal & Selection Guide; the Unsolicited Proposals Manuals & Guidelines on the Selection, and the PPP Contract Management Guide. The Infrastructure Consortium for Africa (ICA) 2014 Report points that the lack of a strong stream of well-prepared, bankable projects is one of the major constraints to the development of infrastructure projects involving external financing in African. In the case of the ICRC, the lack of technical capacity within the agency is compounded by the lack of funding which has hindered expert review and updating of PPP guidelines and primers.

Another challenge confronting the PPPs in Nigeria is the lack of legal enforcement powers for PPP contracts and dispute resolution mechanism in the law establishing the ICRC. To address this challenge, a bill to amend the ICRC Act of 2005 has been sent to the National Assembly of Nigeria and is still pending. A speedy amendment to the Act will no doubt expand existing risk mitigation options available to investors and could help spur PPI in the country. As we draw closer to another election season, it is important to expedite action on this proposed amendment.

Generally speaking, while the main attention of the government on promoting PPI has been directed primarily at the project/transaction level and raising or unleashing financing, the quality and sustainability of infrastructure and related services depend largely on the political will and capacity of the Nigeria government for regulatory reforms where it matters. The Nigerian Government needs to focus more on the risk related issue of contract management and implementation through the life of a PPP. Failure of PPP projects implementation occasioned by weak regulatory capacity, construction uncertainties, land disputes or corruption have a significant impact on the quality of outcomes. Another area requiring the attention of the Nigerian government is that of better maintenance aging infrastructure in use, institutional reform of public utilities and service providers, administrative and regulatory reform, and improvements in the type and administration of subsidies. These set of reforms must be undertaken by the Nigerian government if the infrastructure deficit currently bedeviling the country will be addressed.

How Lack of Coordination is Slowing Down Infrastructure Development in Nigeria


Photo Credit: ICRC website

The 2015 Annual report of the Infrastructure Concession Regulatory Commission (ICRC) raised some important points about the institutional challenges they are having to contend with in delivering on their mandate as the main agency saddled with the responsibility of regulating public-private partnerships (PPPs) to fund the much-needed infrastructural projects. One of such challenge was the poor level of funding the Commission has had to grapple with in past few years. For instance, the commission has not been able to adequate funding to enable provide potential investors and ministries, departments and agencies (MDAs) of the government at all tiers prepare bankable projects that can be funded by the private sector.

Another challenge heighted in the report was the jurisprudential overlap between the ICRC, BPE and the Bureau for Public Procurement(BPP). The BPP is saddled with the responsibility for Engineering Procurement Construction (EPC) contracts which are entirely financed and regulated by the government, usually through budget allocations. The BPE is on the other hand, is the regulatory and implementing agency for privatization process through which government cedes its intertest or assets partly or fully to private companies. Related to this role is that of the ICRC which regulates procurement process between private sector Project Proponents wishing to partner with government in developing infrastructure, where investment is recouped over time. The broadly similar roles which these agencies play in the procurement processes involving infrastructure has been a major source of conflict and has hampered the smooth delivery of PPP projects in Nigeria. An interim measure has been instituted in 2015 by the Hon. Attorney General of the Federation (AGF) and Minister of Justice via a review of the applicable laws and a subsequent ‘guideline’. The report, however, insisted a more permanent solution to the conflict would be a legislative intervention in the manner of an amendment by the National Assembly(NASS) of all relevant legislations regarding PPP and Private Participation in Infrastructure(PPI) development in Nigeria.  

In a bid to get a lasting solution to the conflicts, the report hinted that an amendment to the existing laws had been proposed and is waiting consideration by the NASS. This proposed amendment was most likely presented before or within the year 2015. However, a search through the official website of the NASS did not confirm any such bills existed in the NASS database. Further, the official website of the ICRC is yet to make available the 2016 Annual Report of the commission. So, it cannot yet be verified whether such a bill had gone through the NASS and already assented to the President of Federal Republic of Nigeria. In other words, it is not clear what the status of the bill is, just in case it had reached the NASS. In a related development, the Deputy Speaker of the House of Representatives (the lower chamber of the NASS), Rt Honourable Sulaimom Lasun Yussuff, had opined that the ICRC Act of 2005 will have to be reviewed. He posited that the NASS may be compelled to carry out a review of the ICRC Act (2005) so as to strengthen the law and to ensure better collaboration between the private sector operators and the government. His words are as follows: “Government cannot provide all the infrastructure that are required to make lives more meaningful to the people. The government also cannot effectively maintain all existing structures all by itself alone. Thus, the provision and maintenance of infrastructures impose enormous financial burdens on the government. Hence, the recourse to the PPP model.” This statement was made while he was while delivering a speech titled: “The gains and losses of Public Private Partnership in Infrastructure Development” at a programme put together by the Nigerian Institution of Mechanical Engineers, Ibadan chapter at the Assembly Hall, North Campus, The Polytechnic Ibadan, on 15th September 2017.

The above story is just as confusing and puzzling as it sounds. A number of questions beggar the mind. The first is whether the Honourable Speaker is not aware of a bill before the NASS seeking an amendment to the extant ICRC Act (2005)? Or is the Honourable Speaker referring to another amendment that defers from what the ICRC had initially put before the NASS before or in 2015? Another question is whether the NASS is seeking to undertake this amendment as a Private Member Bill, since the Honourable Speaker did not hint at any collaborative work with the ICRC, or the Federal Government on such potential amendment. Or is this one of those cooked-up speeches by Aides of public officer holders and their speech writers? These happenings do not put Nigeria and the Federal Government in any good light when it comes to the issue of promoting PPI.

The message here is that Nigeria needs to get its game right in the area of institutional coordination for infrastructure development if it wants to be taken serious by the world. An agency as important as the ICRC cannot be seen to handicapped financially consistently through poor budgetary allocation. And the Honourable Speaker of the House of Representatives wants to be seen as pushing for an efficient or viable ICRC while the same agency suffers from lack of funding for expenses as basic as payments to consultants to review contract preparation manuals and templates, this is puzzling. Similarly, it is clearly not acceptable that a key Officer of the NASS would not be aware of a bill as critical as the one requesting for the amendment of the ICRC Act 2005, if such bills have been put before the NASS. This coordination failure is alarming and needs to be addressed in the interest of the generality of Nigerians whose future depends largely on the state of domestic infrastructure.

The proposed amendments obviously do not have any connotation of political sensitivity. The imperative to empower the ICRC to perform its functions effectively will benefit all parts of the country and would do no one bad if the NASS and the ICRC get their ass together and pursued needed action to get the requisite legislative intervention to enable infrastructure PPPs in Nigeria. 

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