The private sector investment and rapid involvement in Nigeria’s infrastructure remains the Panacea for our expected development to bridge the deficit.
Nigeria, the largest economy in Africa, is plagued by inadequate infrastructure, which hampers economic growth and development. Poor transportation networks, unreliable energy supply, and inadequate healthcare facilities are just a few of the challenges that affect both domestic and foreign investments could be solved by Private Sector involvement.
The Federal Government has initiated measures to eliminate bureaucratic obstacles that have hindered private sector investment in essential road projects for more than a year.
This initiative is a part of broader efforts designed to catalyze substantial infrastructure development through a Public-Private Partnership (PPP) framework driven by Private sector.
Wale Edun, Minister of Finance and Coordinating Minister for the Economy, shared this update during an interview.
The involvement of private sector players is crucial, as it not only accelerates the progress of these projects but also enhances efficiency and quality through investment in modern technologies and management practices.
Private Sector active participation will undoubtedly contribute to developing Nigeria’s infrastructure, fostering economic growth, and improving the overall quality of life for its citizens.
Wale Edun reiterated President Bola Tinubu’s dedication to tackling Nigeria’s annual infrastructure deficit of $100 billion by engaging private capital.
He pointed out recent approvals from the Federal Economic Council that enable private investors to advance the Benin-Asaba Highway and the Lagos-Abeokuta Road, both integral to the Highway Development and Management Initiative (HDMI) initiated under the previous Buhari administration.
Initially, the HDMI attracted considerable interest from domestic Private Sector Investment investors; however, bureaucratic delays impeded progress.
Edun remarked, “Now, with the Tinubu administration’s intervention, the projects alongside a broader 5,000-kilometre road concession programme are moving forward. Investors have secured long-term financing, much of it from domestic sources, to construct, toll, and maintain these roads, significantly improving transport efficiency.”
“These investors have gathered long-term finance, much of it from Nigeria, in order to build these roads, concession them, and toll them,” Edun stated. He mentioned that travel times are expected to be reduced by 75%, making the journey along the Benin-Asaba corridor shrink from four hours to just one hour.
Edun further elaborated that the HDMI’s timeline reflects both the challenges and advancements in Nigeria’s PPP road infrastructure development.
He clarified the projects’ timeline, designating March 2021 to February 2022 as the bidding phase, during which 18 out of 75 bidders were qualified.
He noted that June 2022 was reserved for negotiations on concession terms.
In January 2023, the Federal Executive Council (FEC) approved nine road corridors totaling 1,374 kilometres, anticipating an impressive N11.54 trillion in revenue over the subsequent 25-year concession period. By May 2023, concession agreements for nine pilot roads were signed with six concessionaires, including Africa Plus Partners Nigeria Limited (APPNL), which secured contracts for the Benin-Asaba, 125 kilometres, and Lagos-Abeokuta, 80 kilometres, expressways.
“From November 2023 to January 2025, a series of renegotiations, addendums, and legal adjustments will take place. The HDMI programme has engaged multiple concessionaires for specific highway corridors,” he explained.
He listed several key participants, including Africa Plus Partners Nigeria Limited (APPNL), responsible for the Benin-Asaba Expressway (125 km) and Lagos-Abeokuta Expressway (80 km), and Avia Infrastructure Services Limited (AISL) overseeing the Abuja-Lokoja Highway (195 km).
Additionally, he mentioned: “Enyimba Economic City Consortium handling the Onitsha-Owerri-Aba Highway (161.2 km) and Enugu-Port Harcourt Expressway (200 km).
The AFC/Mota-Engil Consortium is focusing on the Sagamu-Benin Highway (258 km) and the Lagos-Badagry-Seme Border Road (79 km). The China Harbour Engineering Company Ltd (CHEC) is managing the Abuja-Keffi-Akwanga-Lafia-Makurdi Highway (175.9 km) while the Dafac Consortium is dedicated to the Kano-Shuari Highway (100 km).
Private Sector
The Solution is Private Sector Involvement
Given the country’s budgetary constraints and fiscal challenges, aligning private sector investment with public infrastructure needs presents a compelling solution to bridge the infrastructure gap.
The Infrastructural Challenge in Nigeria
- Transportation: Nigeria’s road networks are underfunded and poorly maintained, while rail and air travel options are limited. Traffic congestion in urban areas contributes to lost productivity.
- Energy: The country faces chronic power shortages, which stifle industrial growth and affect quality of life.
- Healthcare: The healthcare infrastructure is inadequate, with hospitals lacking necessary equipment and resources, resulting in poor health outcomes.
The Role of the Private Sector
- Funding and Investment: With the government unable to meet its infrastructural financing needs, private capital can play a crucial role. Public-Private Partnerships (PPPs) allow for shared investment, risk, and expertise.
- Innovation and Efficiency: Private enterprises often bring innovation and efficiency to project execution, leveraging advanced technologies and management practices that the public sector may lack.
- Job Creation: Increased private sector involvement not only enhances infrastructure but also creates jobs, boosting the economy.
Models of Private Sector Involvement
- Public-Private Partnerships (PPPs): Structuring long-term contracts in which private entities provide public infrastructure can help leverage funds efficiently. The Nigerian government has initiated various PPP projects in sectors like transport and energy.
- Build-Operate-Transfer (BOT): Private investors construct infrastructure, operate it for a specified period, and then transfer ownership to the government.
- Infrastructure Funds: Establishing specialized funds that pool resources from various private investors to finance large-scale infrastructure projects, ensuring better risk diversification.
Enabling Environment for Private Sector
- Regulatory Framework: A robust legal and regulatory framework that encourages private investment is critical. This includes transparent processes and regulations that protect investors.
- Stability and Governance: Political stability and good governance, including effective contract enforcement and anti-corruption measures, are vital to attract private investment.
- Risk Mitigation Mechanisms: Creating guarantees and insurance products can help mitigate risks associated with long-term investments in infrastructure.
Case Studies
- Lagos State Infrastructure Projects: The successful involvement of private investors in projects like the Lagos-Ibadan Expressway illustrates the potential of PPPs in improving urban infrastructure.
- Power Sector Reforms: The privatization of Nigeria’s electricity distribution companies has shown how private management can lead to better service delivery and infrastructure development.
The private sector holds significant potential to transform Nigeria’s infrastructure landscape. By fostering an environment conducive to private investment through regulatory reforms, government initiatives, and transparency, Nigeria can address its pressing infrastructural needs. While challenges remain, a strategic partnership between the public and private sectors can accelerate development and boost the nation’s economic prospects.
Engaging the private sector is not just a stop-gap solution; it is an essential paradigm shift necessary for sustainable infrastructure growth in Nigeria.