Experts Call for Transparency in Nigeria’s Infrastructure Partnerships
As Nigeria confronts a staggering infrastructure deficit estimated at $2.3 trillion between 2020 and 2043, the federal government is intensifying its efforts through public-private partnerships (PPPs). However, experts emphasize that these initiatives must be grounded in institutional transparency and legal certainty. Without a reliable legal framework, attracting private investment remains a challenge.
The Infrastructure Concession Regulatory Commission (ICRC) Act, enacted in 2005, was designed to foster private sector involvement in the financing, development, operation, and maintenance of government infrastructure projects. Jobson Ewarefo, the ICRC Director-General, highlighted during the G20 initiative Global Infrastructure Facility at the IMF/World Bank Spring Meetings that Nigeria requires approximately $100 billion annually over the next two decades to address its infrastructure needs. He acknowledged that current budget allocations are inadequate and that private sector involvement is crucial for successful infrastructure delivery.
Experts, however, suggest that Nigeria’s PPP initiatives are hindered by a pervasive lack of trust in governance, corruption, and a disregard for the rule of law. According to Bamidele Ayo, an economist based in Abuja, the PPP models that have successfully transformed infrastructure in other emerging economies have not fared well in Nigeria due to deep-seated skepticism regarding government policies. He pointed out that previous experiences have led private sector entities to withdraw from potential PPP projects because they do not trust governmental promises.
Ayo specifically noted that the government’s historical failure to honor contractual agreements deters both domestic and foreign investment. He expressed concern that the current administration does not genuinely recognize the importance of the private sector, making it unlikely that investors would engage with a government that appears to operate without accountability. Furthermore, he identified a conflict between the socio-economic objectives of the government and the profit motives of private sector players, complicating the feasibility of infrastructure projects.
Investment in infrastructure is typically capital-intensive and requires a substantial amount of time before yielding returns, which can dissuade potential investors. Ayo remarked that while financial returns are a primary concern for investors, government priorities are often non-financial, creating an inherent tension. This discrepancy often makes projects appear too risky for private financiers, especially when government support is unreliable.
Muda Yusuf, CEO of the Center for the Promotion of Private Enterprise, asserted the need for a robust legal framework that fosters private sector confidence. He emphasized that while engaging with governmental bodies can be risky, a solid legal structure can mitigate these uncertainties. He also highlighted that the government must assume non-commercial risks, including political risks, to assure potential investors. According to Yusuf, the unpredictability of political leadership can significantly alter project terms, adding to the apprehension around PPP agreements.
Additionally, Yusuf criticized the government’s lack of transparency regarding available projects, asserting that potential investors often have no clear view of viable opportunities. He advocated for better data accessibility and clearer project packaging as essential steps to attract private investment. Emphasizing the importance of bankable projects, he urged the government to ensure reliable cash flow and liquidity to support public-private partnerships effectively.
In a similar vein, Chief Executive Officer My-ACE China, emphasized the necessity of reducing political interference in PPP transactions to narrow Nigeria’s infrastructure gap. He argued that “functional PPPs,” driven by genuine collaboration between public and private sectors, yield positive outcomes, in contrast to “non-functional PPPs,” which he sees as fraught with political agendas. He concluded that effective implementation of PPPs hinges on political will and the elimination of politicization, which often undermines infrastructure projects.
