ENFEEBLED by decades of neglect, Nigeria’s infrastructure deficit continues to aggravate. A new report estimates that the country requires $3 trillion over the next three decades to upgrade its infrastructure to optimal level. That is a yawning gap militating against the socio-economic development of a country that is adjudged the largest economy in Africa but is hobbled by inefficiencies, corruption, cronyism, and mismanagement of resources.
Nowhere is the deficit more pronounced than on the country’s highways, hospitals, educational institutions, and the electricity industry. Accordingly, a May 2021 report on Nigeria’s infrastructure just released by Agusto & Co, a financial consultancy, describes the deficit as colossal. Agusto put it boldly: $3 trillion in 30 years. That means $100 billion annually or consistently spending six times of the 2021 budget of N13.08 trillion annually. This sounds like a bridge too far for the country’s broken finances.
The African Infrastructure Development Index – produced by the African Development Bank – says that Nigeria ranks 23 out of 54 African economies in infrastructure development with a miserable score of 23.27 per cent in 2020. Seychelles took the first spot with 96.73 per cent, Egypt second at 88.39 per cent and war-torn Libya third at 82.97 per cent. Under Goodluck Jonathan, a presidential panel identified over 11,886 abandoned projects nationwide requiring N7.78 trillion to complete, but the deficit has worsened since then. This calls to question Nigeria’s priorities as the so-called giant of Africa.
Reports by the International Monetary Fund and the World Bank had reached similar startling conclusions. Moody’s, an international rating agency, says that Nigeria needs to invest $100 billion annually to close its infrastructure gap. This translates to six times its annual Gross Domestic Product.
The painful fact is that the Nigerian government is currently cash-strapped. Oil revenue, its mainstay, suffers from volatile prices; the government is not generating enough revenue and curiously prefers not to collect its taxes. Indebted to the tune of N32.9 trillion (as of December), it is short of the resources it requires to reverse the deficit and has been borrowing at a frenzied pace. The Presidency has just requested the National Assembly to approve a fresh loan of $6.1 billion, partly to fund the 2021 budget deficit.
An earlier report highlighted the decrepit state of infrastructure, revealing that between 2009 and 2013, the government invested $664 per capita per annum in infrastructure or 3.0 per cent of GDP. That is grossly inadequate. Compared with an average investment of $3,060 or 5.0 per cent of GDP in developed economies, Nigeria’s deficiency is exacerbated by misplaced priorities.
In truth, the regime of Major General Muhammadu Buhari (retd.), like the previous administrations, realises the poor state of facilities. The Minister of Finance, Budget and National Planning, Zainab Ahmed, said in 2019 that Nigeria’s infrastructure stock was estimated at 30 per cent of GDP. The international benchmark is 70 per cent. In February, the regime moved to establish an infrastructure company with seed money of N1 trillion, which is projected to rise to N15 trillion with expected private sector buy-in. This still falls far short of the funding required.
The dearth is benumbing. Take electricity. With an installed generating capacity of just over 12,000 megawatts, made worse by much lower transmission and distribution capacity, 85 million Nigerians, or 43 per cent of the population, lacks access to grid electricity. According to a February 2021 report by the World Bank, that makes Nigeria the country with the largest energy access deficit in the world. In the 2020 World Bank Doing Business report, Nigeria ranked 171 out of 190 countries in Getting Electricity. The result is devastating. Annual economic loss due to electricity shortages has hit $26.2 billion (about N10.1 trillion). It is 2.0 per cent of GDP or just N3 trillion less than the 2021 budget. The rigged privatisation of the generation and distribution companies in 2013 by the inept Jonathan administration compounded the power sector crisis.
All around, there are no roads to drive economic development. Shamefully, the 126-kilometre Lagos-Ibadan Expressway, the busiest artery, has been under reconstruction since the Olusegun Obasanjo Presidency in 2004. It is incomprehensible that such a vital economic asset is being treated with such levity. With annual budget allocations to capital spending averaging less than 30 per cent, the Second Niger Bridge, major expressways, the associated Lagos Apapa seaports roads and the airports, suffer from a similar debilitation. None of the 36 states can boast of having adequate motorable roads.
Additionally, the educational system is in tatters, reduced to near rubble by irrational government policies, including establishing a slew of tertiary institutions at the expense of deep thinking. Repeatedly, lecturers embark on strikes to protest the deplorable conditions in the schools. It is hard to identify a reputable hospital nationwide. Even the President undertakes regular overseas medical trips. Various credible estimates point out that medical tourism costs the economy $1 billion annually.
Most of this is self-affliction, the result of wrong choices, archaic business models and corruption. Public finances are in dire straits partly because instead of selling the four loss-making refineries, the government retains them. It is irrational. Quickly, they should be sold, which offers a sensible way to cut costs and deregulate the downstream oil sector. Indeed, the government can boost the economy by selling off its assets in the aviation, maritime and steel sectors. In the European Union countries, such assets are mostly in the hands of the private sector, with the government providing the regulatory oversight. As suggested, the Federal Government should develop a comprehensive Public-Private Partnership blueprint, which is not subject to politics or cronyism, to attract private investment in critical infrastructure.
The government should get serious. Avoiding sentiments, it should downsize, scrap redundant agencies, merge some, have a nimble, productive workforce, and reduce waste and corruption. It should also consider merging federal universities to reduce cost. Savings from such rationalisation should be ploughed to capital projects, the most scientific way to enhance economic growth.
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