Like most sub-Saharan African (SSA) countries, Nigeria’s economy is constrained by a huge infrastructure deficit, a challenge that is often seen as a cause and effect of its poor economic performance. And with its stock estimated at 18 per cent of gross domestic product (GDP), Nigeria’s infrastructure share of GDP is still a far cry from the internationally-recommended 70 per cent.
As wide as the infrastructure gap of sub-Saharan countries, including Nigeria, is, a report by McKinsey & Company said the region is not only behind in access itself but also falling behind in closing the gap. The claim is backed by empirical evidence from sectors and sub-regional mappings.
For instance, India, which has a similar population size to the region, reportedly expanded access to electricity to an additional 100 million people in 2018 while sub-Saharan Africa only extended access to 20 million people. The slow catch-up could increase the region’s share of the global population with access to electricity, which McKinsey estimated at 69 per cent as of 2018.
The region is not better off in roads and other critical infrastructure. For example, it has an average of 204 kilometres of roads per 1,000 square kilometres with only one quarter paved in contrast with a global average of 944 kilometres per 1,000 square kilometres, with over 50 per cent paved. Low road density, according to the World Bank, means that Africa’s fast-growing cities are affected by increasing congestion, which has significant impacts on both economic development and the safety of road users. While unsafe driving habits and the state of vehicles, according to the World Health Organisation (WHO), are among the causes of accidents, the poor state of roads is often seen as a major risk factor.
With about 18 per cent share of its population, Nigeria embodies the burden of SSA’s historical infrastructure decay – erratic electricity, pothole-ridden/narrow roads, ill-equipped ports and many others. With a fast-growing population, experts have called for urgent and more aggressive infrastructure spending to close the gap and boost the capacity of the economy to create jobs.
Nigeria, in the past, had relied on budgetary allocation to fund public infrastructure. Hence, most of the iconic national infrastructure was either built with windfalls from crude or earnings from cocoa or groundnut pyramid in the heydays of agriculture. While agriculture can barely feed the country, the performance of crude has been on a downward slope in the past half a decade, with last year’s production being the worst in over a decade. These have added to the constraints of direct government infrastructure and have increased the number of abandoned projects at both state and federal levels in the recent decades. A 2012 report indicated that about 12,000 Federal Government projects had been abandoned between 1962 and 2012 while the Chartered Institute of Project Management in 2017 put the monetary value of the projects at N12 trillion. The amount is 17 per cent of the country’s economy, which the Nigerian Bureau of Statistics (NBS) estimated at N72.4 trillion last year.
Sadly also, Nigeria’s tax earnings are among the lowest in the world. Even within Africa, the eight per cent tax to GDP ratio does not measure up with the regional average, which is estimated at 25 per cent. The FG has often argued that its infrastructure spending is seriously constrained by the low earnings.
While existing data are backwards-looking, future projections do not inspire any hope. Indeed, nothing speaks about the country’s infrastructure incapacitation than 2022 to 2024 Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP). Whereas the capital expenditure (CAPEX) component of the budget currently being implemented is 29 per cent, the medium-term plan puts CAPEX spending at 21, 20 and 18 per cent in 2022, 2023 and 2024 respectively. Though the actual 2022 budget scaled up the capital vote to 32.7 per cent or N5.4 trillion in absolute terms, experts believe the amount is a drop in the ocean when weighed against the huge national need.
THE argument vis-à-vis the reality of the country’s fiscal position has renewed the discussion on finding a workable alternative infrastructure financing model. While the debate continues, the country, inadvertently, may have been test-running the difference special purpose vehicle (SPV) option could make. For one, the Second Niger Bridge, a project under the management of the Nigeria Sovereign Investment Authority (NSIA), is 91 per cent completed, according to government officials who were there for inspection. The overall completion rate, putting the bridge and support infrastructure into the same basket, is estimated at 84 per cent.
On the project, the Chairman of the Board of Directors of NSIA, Farouk Gumel, said: “The Board is pleased with the quality and pace of work. Undoubtedly, the Second Niger Bridge is a vital piece of national infrastructure. With the construction now over 84 per cent done, it will soon begin to reduce travel time and minimal traffic which will, in turn, increase economic activities and enhance the connection between northern and southern parts of the country. A Nigeria that is suitably connected with world-class infrastructure is the Nigeria of our dreams and this road will help in achieving that.”
During a visit, the Minister of Works and Housing, Babatunde Fashola, had said: “What I said was the bridge link will be completed around February or at the latest the end of the first quarter. We are now heading towards the end of the first quarter and as you have heard from them, they will complete the east-bound link on March 15 and the west-bound link on April 2.”
As projected by the former Lagos State governor, the linking of the Second Niger Bridge was done on April 2 in the presence of the Minister of Finance, Budget and National Planning, Zainab Ahmed; Gumel; NSIA Managing Director, Uche Orji and the Deputy Governor of Anambra State, Gilbert Ibezim, during a tour where the Finance Minister said: “Today is a very significant day in the construction cycle of the Second Niger bridge. This is one of the most iconic projects in the country, initially costing a contract sum of N206 billion.
“Today, we have been able to fund this project with N157 billion and I am here to see where all this money is going. And also, the significance of today is that the two ends of the bridge are being put together and this is the final phase of the work. So, technically, I can report to the President that I have seen where all the N157 billion has gone to. This is a project that is very dear to the President and it is designed to uplift the lives and livelihood of the people of the South-East and other parts of the country.”
The importance of the analysis is less of the official showboating than the value of the project and the difference innovative funding models can make in the country’s infrastructure space. During the execution phase, over 20,000 individuals, mostly youths, of the contiguous states were actively engaged. Interestingly, the benefiting states – Anambra and Delta – are notorious for youth restiveness. This suggests that the project would have reduced social tension in the area.
