Based on the Act that established it in 2005, the Infrastructure Concession Regulatory Commission (ICRC) is charged, for the benefit of Nigerians, with catalysing public and private resources for the development of world class infrastructure.
In collaboration with government ministries, departments and agencies (MDAs) as well as international agencies, ICRC’s lofty goal is to augment higher gross domestic product (GDP) growth, at least 10 percent a year – and ultimately Vision 20:2020, by facilitating the development of world class infrastructure through Public Private Partnerships (PPP).
Lamido Sanusi, governor of the Central Bank of Nigeria (CBN), reckons that “the current level of infrastructure deficit in the country is perhaps the major constraint towards achieving that national vision of becoming one of the 20 largest economies by 2020.”
For almost eight years since the establishment of the Commission, Nigerians are yet to feel its impact. After fits and starts, privatisation of the power sector is gaining traction. Plans for other projects have stalled. ICRC, the referee, is on an elongated pre-match break.
Meanwhile, federal roads in most parts of the country are death traps, destroying lives and property. Many projects – agro-allied infrastructure, deep seaports, airports, and railways – are yet to materialise. For instance, the proposed concession of 25 silo complexes located in different parts of the country as part of the Agricultural Transformation Agenda.
Dearth of capacity and paucity of ideas, in the public and private sector, are hampering infrastructure finance. Infrastructure finance, fraught with poor project development, an inadequate legal framework, risk misallocation and insufficient political consensus does not work. Which is why the ideas generated at the parley between the CBN and ICRC are welcome.
Efforts by multinationals and consultancies to fill the capacity gap through training are also commendable. Both have recognised that the road to bankable projects is paved with patient capital. There is a glaring mismatch between the tenure of funds available to commercial banks and the lifespan of infrastructure projects. Thus, roads stay unpaved. Funds that can wait out a 20-year period at a low and stable rate will find projects to finance – not the short-term liabilities sitting on the balance sheet of commercial banks.
In addition, civil servants need to change their mindset: PPP isn’t about revenue raising. In a recent interview, Pascal Odibo, country director of Jeff & O’brien, commented that “ring-fencing revenues from projects do not come easily to state governments.”
Government officials have to realise the need for incentives. Thankfully, the CBN governor is pondering project sweeteners like a seven-year moratorium, single-digit interest rates for 20-30 years, with mandates that split the investment, e.g., 75 percent in hard infrastructure and the balance in procurement.
We also appreciate the federal government’s plan to expedite action on the composition of the board and management of the Sovereign Wealth Fund (SWF), a veritable means for tackling Nigeria’s infrastructure gap. There are ample SWF models to sample: China, Singapore, Hong Kong, Malaysia and the United Arab Emirates. The sooner Nigeria deliberately begins to profitably employ her oil wealth in hard and soft infrastructure, the better.
