Great news! A transformational bridge and a seaport, two of the most high-profile infrastructure projects in the recent history of Nigeria, are in their final stages of completion. Having been lucky to be relatively well-informed about the origins and travails of both projects through some early work with both promoters many years ago, I am quite pleased to see both projects reach successful commercial operations. Large infrastructure projects are complex and difficult to execute everywhere in the world, and particularly so in Nigeria where any number of factors can derail a project at any time. So, there is a lot for us to learn about the success of the Second Niger Bridge and the Lekki Deep Sea Port projects, and I will attempt to lay out some of the key factors in this article.
As a senior professional in the business of financing infrastructure, I am privileged to come across dozens of project concepts every year. At Africa Finance Corporation, one of the early points we always make to project sponsors is that there are three key things we look out for on first engagement with a project concept, and these are: (1) commercial logic, (2) industrial expertise, and (3) financial capacity. The great thing about the two projects we are discussing today is that they both provide an excellent opportunity to illustrate each of these important success factors.
The commercial logic for this bridge and seaport has been plainly evident for decades. The sole bridge previously connecting Eastern and Western Nigeria across the great river Niger was first conceived in the 1950s, and construction work was completed on it in 1965. Prior to that, a ferry service was the only available option for transporting the huge volumes of human and freight traffic across these two critical sections of Nigeria. Since 1965, trade and passenger volumes have clearly surpassed the limited capacity of the eight by four hundred- and twenty-feet double lane carriageway of the original Niger Bridge, causing massive traffic logjams at both ends and forming a major bottleneck to travellers and transporters. A new solution has been in demand for decades. Similarly, there is not much need to recount the severe infrastructural quality and capacity shortfalls in Nigeria’s main seaport complexes at Apapa and Tincan Island in Lagos, which has been an escalating crisis for the national economy over the last decade at least. By comparison to smaller countries with much lower traffic volumes like Togo, Benin and Ghana, the Nigeria port system has long left a lot to be desired in terms of throughput capacity and turnaround times. Again, the demand for additional seaport capacity in Nigeria has been self-evident, indicated by sub-par operational statistics at the existing ports, with significant negative economic impact.
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But commercial logic in infrastructure development goes beyond just evidence of demand, which is one point we often make very early to project sponsors. The evidence for demand needs to be properly studied, researched, documented, peer-reviewed, validated, and analysed by comparison to alternative options for delivering the same or similar infrastructure solutions to users at acceptable costs. This work of defining commercial logic in scientific terms is often reliant on our next key success factor, which is industrial expertise on the part of the project promoters. Too many projects fail because they are not in the hands of the appropriate promoters. In the case of Lekki Sea Port and the Second Niger Bridge, the industrial expertise was procured via the Herculean multi-year due diligence and project development efforts of key promoters like Tolaram Group and the Nigerian Sovereign Investment Authority (NSIA) respectively.
These two great project sponsors ensured that everything from key technical and commercial partnerships, engineering, technical, and commercial feasibility studies to environmental and social impact assessments, to financial models and contractual documentation were procured to best-in-class international standards, with the appropriate levels of industrial expertise required. There were many inflection points in the history of both projects where failure would have been certain, were it not for the strong industrial and infrastructural development capacity in place within the ownership and management of these two sponsor groups.
This brings us to the final key success factor. Industrial expertise by itself is not of great value, if the sponsor lacks the financial capacity to invest the needed early-stage development capital required by the project. Again, our two sponsors in the above case study projects demonstrated the willingness and capacity to invest the needed sums, in one case from private resources, and in the other from a well-structured public sector funding arrangement. This is one important area of divergence between the two projects. Lekki Sea Port is an entirely private sector-led initiative, which is one of the most ambitious examples of its kind in the history of Nigeria. In essence, this US$1.6 billion project was conceived, planned, structured, and developed by the entrepreneurial energy of private sponsors (the family-owned Tolaram Group of Singapore), who then brought onboard all the necessary government partners at both federal and state levels (particularly the Nigeria Port Authority and Lagos State Government as equity partners), as well as the international investors and banks (particularly the China Harbour Engineering Company and China Development Bank) to complete the project.
On the other hand, Second Niger Bridge is a massive public infrastructure undertaking with a combined project cost of approximately N406 billion originally conceived by the Federal Government of Nigeria (FGN) as a public private partnership, but ultimately implemented as a 100 percent public sector procurement funded by the FGN through its innovative Presidential Infrastructure Development Fund (PIDF). The PIDF itself is managed by the NSIA, which has taken on its shoulders the remarkable project development and implementation challenges of not just this project, but two other critically important infrastructure projects in Nigeria (the Lagos-Ibadan Expressway, also nearing completion and the Abuja-Kano Road, under reconstruction). Under the excellent leadership of Uche Orji, the NSIA has managed these challenging additions to its original mandate very remarkably, and all of the success with these projects is directly attributable to the corporate governance, operational discipline, industrial expertise, and financial capacity he has helped to institute in that critical national institution.
One of my favourite aphorisms to repeat is that “we must never underestimate the importance of a good example”. The excellent work that has been done by the sponsors, promoters, government agencies and other key stakeholders involved in the Second Niger Bridge and Lekki Seaport projects deserves all the applaud and accolades that they will inevitably attract. There is a lot to learn from these successes, and we must not only learn these lessons but apply them repeatedly in the development of successful infrastructure projects all over Nigeria. There is no shortage of potential projects to be done; what is required is the discipline to follow the key principles and success factors illustrated by these transformational case studies.
Fola Fagbule is deputy director and head of financial advisory services at Africa Finance Corporation
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