Nigeria Needs $14bn Every Year For Infrastructural Development – Okonjo-Iweala

Nigeria needs an annual investment of $14 billion to boost infrastructure in the country, Dr. Ngozi Okonjo-Iweala, Coordinating Minister for the Economy and Minister of Finance has said.

The minister said this at the Public Private Partnership (PPP) stakeholders’ workshop organized by the African Development Bank (AfDB), in Abuja, yesterday.

“To fund infrastructure, Nigeria needs about $14 billion every year, out of which $10 billion should come from the federal level. And this estimate is not comprehensive because it is likely to be higher when the total financial outlay needed to fund the Infrastructure Master plan is calculated,” said okonjo-iweala.

“Currently the country’s spending on infrastructure is about $6 billion, so there is a big gap that needs to be filled. We are talking about something in the region of $8 billion. That is why PPPs are very important to Nigeria at the moment”.

The minister stressed the need for continued PPP, as she noted that the government cannot do it alone. She however noted that some of the PPP arrangements of the past were bogged down by certain inadequacies in the frameworks of the deals, hindering their progress. She therefore recommended that PPPs be reviewed in so as to deliver desired benefits.

“We need to improve the PPP model to ensure that it suits the country’s needs, delivers clear benefits without leaving us with difficult problems.

“One of the problematic areas is the amount of time needed to complete a PPP project. On the average, according to studies, it takes seven years to complete a PPP project in Africa. This is too long! For policy makers and political leaders who are operating on a four-year term, seven years to deliver a project which they have promised the people is not very attractive.

“The difference in time horizon between policy makers and technical partners needed to be reduced. PPPs need to be processed faster. In other words, we need better financial, legal and regulatory capacity to achieve faster results.

“Another issue, which we have observed is that there is s tendency to make legal requirements too complicated and load every risk on government to the benefit of investors who walk away with rewards at virtually no risk. Government alone can’t bear all the risk. The risks need to be shared to make the project fair and sustainable.

“Besides, the rate of return expectation of investors tends to be too high and this is reflected in unsustainably high costs of PPP projects. Sometimes it is as high as 30%. The consequence is that tolls are too high and the public understandably becomes hostile to the project and this leads to all kinds of problems.

“There is therefore a need to have a right financial and economic framework which will ensure that investment is profitable but also benefit consumers and the economy,” Okonjo-Iweala said.

The AfDB Director in Nigeria, Dr. Ousumane Dore, while speaking at the event disclosed his organization’s decision to establish a PPP Hub in Nigeria to assist the nation and others in the West-African Sub-Region in their efforts at attracting private funds to infrastructure investment.

Some PPP projects such as the Lekki Deep Sea Port, the Onne Port in Rives State, Lagos-Ibadan Expressway, Second Niger Bridge have already commenced, according to the Finance Minister, who added, “we need much more because our needs are so great”.