In November 2018, Nigeria awarded a $500 million contract to the Sierra Nevada Corporation to manufacture 12 A-29 Super Tucano attack aircraft planes for the Nigerian Air Force.
Exactly a year earlier, in 2017, Brazilian aviation giant Embraer announced that it had received a firm order from the Philippine Air Force for six A-29 Super Tucano close air support (CAS) aircraft. IHS Jane, the world’s leading source of defence intelligence, reported that the Philippines’ A-29 contract was valued at $99 million.
The Philippines contract equates to $16.5 million per Tucano aircraft whereas in Nigeria’s case, when other costs included into the contract is taken out, it was $30 million for each one of the 12 that would finally arrive last year.
Why Nigeria paid about double the amount the Philippines paid for the same specification of Tucano jets will leave many scratching their heads, but for Nigerians inflated government expenditure is nothing new.
For years now, at the Nigerian Air Force bases in Makurdi, Kainji and Lagos, unrepaired combat and transport planes bought in the 1970s and 1980s including the French built Alpha Jets, the Anglo-British Jaguar strike aircrafts and the medium-lift C-130 transport planes lie idle and wasting, unmaintained and unused by the Air Force. Nigeria’s biggest ship and only Frigate NNS ARADU has for over a decade been inactive, idle and wasted, unrepaired by the Navy.
‘Beegeagle’, Nigeria’s leading defence analyst noted in 2012 about the Nigerian Air Force Jaguar aircrafts, “The Jaguar jet has had the shortest service life in the Nigerian Air Force, thanks in no small part to the nature of the purchase contract and the international politics of arms transfer at that time. An initial batch of 12 single seat variants were supplied and later six twin-seat versions which were used for pilot training in the United States were inducted into the NAF.
“Sometime in 2007 when these jets were put on display by the NAF for prospective buyers to inspect, it emerged that a Jaguar B TRAINER variant (NAF 703) had flown for only 150 hours 54 minutes since it was manufactured in December 1984. It had its 100 hours’ inspection on the 10th day of February, 1986. It suggests that the created fleet of Jaguar jets is almost brand-new still”.
Simply put, for more than three decades, military aircrafts as well as other assets and platforms bought with tax payers’ money have been wasting away in the open, buffeted by the vagaries of the environment, simply because the military and the government have no interest in repairing them. They are more interested in buying new systems.
Waste, driven by corruption, pervades Nigeria’s defence sector. Transparency International (TI) in a report warned, “Corruption had an undeniable impact on Nigeria’s security situation. Corruption in the defence sector, in particular, has resulted in the waste of billions of dollars’ worth of public funds”.
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Corruption and corrupt practices, Kwopnan Bulus, a lecturer in the Department of Political Science at the University of Jos, posits, are the essential problems with poor infrastructure execution, maintenance and procurement in Nigeria.
According to Bulus, “in most cases and as we have seen, kickbacks to politicians and bureaucrats have become so entrenched that it results in poor quality of infrastructure. In addition, a lot of these loans were diverted and used for purposes other than what they were initially procured for. Once this is done, the result is that such infrastructure would unlikely yield the objective result.
“So what the Chinese are doing now,” he added, “is that instead of giving the money to Nigerians, they give the contracts to Chinese companies and pay them, thus eliminating the corruption that is so inherent in the Nigerian system. I think that’s what they are doing with respect to the Akwanga-Makurdi road. We need to be more deliberate about the monitoring and evaluation of the execution and outcomes of the infrastructure projects we are undertaking.”
It is not just about corruption though. It is also the bigger issue of the culture of maintenance that has resulted in poor value for Nigerians for money spent by the government, says Rajneesh Narula, the John H. Dunning chair of International Business Regulation at the Henley Business School, University of Reading. “Many Nigerian politicians,” he notes, “historically tend to want the latest model, rather than spending money on training and undertaking regular maintenance and repairs.”
And it is not just the putrid defence sector alone. Nigeria’s power generation has an installed capacity of about 12,522mw, mostly built from loans garnered in the 1980s and 1990s. Yet, actual generated power hovers between a scandalous 3000mw and an immoral 4500mw. The historic gap between the demand for power in Nigeria and the electricity available from the grid has led to widespread self-generation of power in the commercial, industrial and residential sectors; many individuals and businesses own their generators to compensate for lack of access to and supply of energy.
Businesses’ reliance on self-generation via diesel-powered generators has resulted in continuous increase in the price of goods and services. This is because, typically, self-generation accounts for a significant portion of most businesses’ recurrent expenditure; such significant overhead costs are clearly being passed onto consumers.
The World Bank in 2021 noted that 85 million Nigerians do not have access to grid electricity. This represents 43 percent of the country’s population and makes Nigeria the country with the largest energy access deficit in the world. “The lack of reliable power,” said the bank, “is a significant constraint for citizens and businesses, resulting in annual economic losses estimated at $26.2 billion (₦10.1trn) which is equivalent to about 2 percent of GDP.
“According to the 2020 World Bank Doing Business report, Nigeria ranks 171 out of 190 countries in getting electricity and electricity access is seen as one of the major constraints for the private sector.”
Yet, tens of billions of dollars have been spent between 1999 and 2021 to generate microscopic amounts of power. The Federal Government has reportedly spent around $31.45 billion on the sector between 1999 and 2013.
According to dataphyte, in 2021, “almost six years into the Buhari-led government, over ₦1.3 trillion has entered into the electricity sector,” in the form of budgetary provisions and support.
In 2019, the World Bank approved a $550 million loan for Nigeria to develop mini grids and solar home systems. In June 2020, the government approved $120 million for the continued construction and completion of the Kashimbila multipurpose dam in Taraba State, expected to generate 40mw and water for the community. The government recently signed a six-year, N1.15 trillion contract with Germany’s Siemen AG for a three-phased electrification project aimed at increasing Nigeria’s power to 25,000mw.
In March 2021, Nigeria’s government announced that it intended to spend $3 billion on the energy sector in the next 24 months to increase the power being wheeled by the Transmission Company of Nigeria (TCN) from the current 4,900mw to at least 7,000mw.
In the transport sector, $5 billion worth of rail projects were flagged off in 2021 with a promise by the government to spend tens of billions of dollars on its rail networks in the coming years. After borrowing over $5 billion from the Chinese to build new rail tracks and buy new locomotives, the country is seeking a further $14.4 billion from outside China to fund an upgrade of a narrow-gauge track in the South-East and the building of a standard-gauge on the coast.
In 2017, Nigeria’s government secured a $6.1 billion loan from China Exim Bank for the construction of Calabar-Port Harcourt, Lagos-Ibadan, Lagos-Kano rail, and Lagos to Kaduna railway and another $1.5 billion counterpart funding for the Lagos-Ibadan project. The administration has accumulated various other loans to fund the projects, which form part of the N40.08 trillion-sovereign-debt burden that is currently weighing heavily on the country’s fiscal position.
In spite of the huge investments made in the rail sector since 2006, the impact of rail on the economy is still meagre. It has done little to reinvigorate the economy, “because the focus is on passengers, the majority of whom who see the ticket prices as too expensive rather than on the movement of goods where much of the income for rail transport globally comes from,” said a Chinese civil engineer involved in the construction of the country’s rail projects.
For Professor Narula, the focus should be on maintenance. “Somewhere in the 1970s,” he notes, “the Dutch ran the railways. In the 1980s, the Indian Railways sent thousands of workers to Nigeria and Nigerians to India to train them in running the railways efficiently and maintaining existing rolling stock, but then after the Indians left, it returned back to the original state of disrepair and inefficiency. Now we have spent a fortune buying trains again, but will they be maintained once the Chinese stop managing it?”
Value for money is not a completely Nigerian problem, argues Andrew Nevin, partner, Financial Services Lead and chief economist at PwC Nigeria. For Nevin, who has lived in Nigeria since 2008, “people all over the world complain of waste. The concept of value for money is new”. In the past, he further notes, “governments did whatever they liked and citizens couldn’t do much. Now this is changing, governments are asking for taxes and levies from citizens and citizens are asking for improvement in the provision of public goods such as education, health, water and electricity. Therefore, there needs to be clear signs that the government can deliver on projects.”
A major challenge he posits, “is the multiplicity of MDAs in Nigeria.” Most of these agencies, he argues, “were never created to deliver value. They were created for patronage during the oil boom days. Due to the many actors involved, and elongated decision-making process, they drive up the cost of value creation and drive down efficiency.”
Nigerians, he urges, should keep putting pressure on governments in a constructive way. “Citizens’ action is no doubt having an effect on the government. We can see that with the programme and project deliveries of the governors of Lagos, Edo, Kaduna and now the election of a brilliant economist and highly competent manager in Anambra, Professor Charles Soludo. People should make their voices heard and choose the right leaders.”
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