Exploiting PPP to develop infrastructure

From time immemorial, collaborations have always been essential to human existence and have been essentially productive in promoting poverty alleviation through various initiatives. As the Bible puts it, “One will chase a thousand and two will chase ten thousand.”

In Nigeria and elsewhere, sustainable access to healthcare and other socio-economic services and products has been accomplished through public-private partnerships (PPP), where the government delivers the minimum standard of services, products, or care; the private sector brings skills and core competencies; and donors and businesses bring in funding and other resources.

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The Nigerian Public-Private Partnership Network (NPPPN) was established in 2011 through collaboration between the Infrastructure Concession Regulatory Commission (ICRC), the Lagos State PPP office, and the Nigerian Infrastructure Advisory Facility (NIAF) to create a platform for all state heads of PPP units nationwide.

On the other hand, the Nigerian building and construction sector is one of the most crucial, mainly for its contribution to the basic human need of shelter, and the fastest-growing sector in the Nigerian economy. In the last few years, the sector has experienced rapid double-digit growth rates.

According to the National Bureau of Statistics (NBS) in its July 2024 data, the Nigerian construction sector accounted for approximately 4 percent, contributing N18. 7 trillion ($44.5m) to the nation’s Gross Domestic Product (GDP). Although there has been some contraction in recent times due to economic headwinds, the sector’s overall contribution to GDP is still significantly low.

Be that as it may, the issue of abandoned projects, at least at this trajectory of our nation’s history, should be a thing of shame. Public infrastructure should no longer suffer delay in completion, as exploiting the PPP model can ensure timely completion—(Joint Venture (JV) and the Build-Operate-Transfer approaches are variants of the PPP model).

In recent times, the PPP model has seen notable success primarily in the port sector, with the concessioning of Lagos Container Terminals demonstrating significant improvements in efficiency and revenue generation, considered one of the most prominent examples of a successful PPP in Nigeria. Other areas where PPPs have shown success include road infrastructure projects like the Lagos-Ibadan Motorway and Oshodi-Apapa Motorway, and specific airport terminal developments like the Murtala Muhammed Airport Terminal 2 (MMA2) managed by Bi-Courtney Aviation Services.

In Lagos State also, the PPP successes include the Lagos light rail project and the Lekki Motorway project. Those in FCT Abuja include BOT Market and Katampe District Engineering Infrastructure, while in Edo State under Governor Godwin Obaseki, the MOWAA and Radisson Blu PPP projects.

Sadly, the mixture of the terms of agreement with political tendencies by sitting governors are often the reasons most Nigerians do not see what the PPP model has achieved so far in the Nigerian infrastructure landscape.

“Sadly, the mixture of the terms of agreement with political tendencies by sitting governors are often the reasons most Nigerians do not see what the PPP model has achieved so far in the Nigerian infrastructure landscape.”

The recent talk by the minister of works, David Umahi, that the Federal Government has contemplated bringing back tollgates is a welcome idea, as this will improve highway security to a significant level. Above all, our highways will always receive timely interventions without yearly budgetary allocations that are never enough for repairs. We believe this only will work if the contractual agreement is transparent and devoid of any political undertones.

We realise that another factor responsible for this slow impact is the shortage of funds for project execution. Infrastructure in Nigeria in particular has suffered some of the major consequences of deferred maintenance and underinvestment in the construction industry. This has constantly led to fatal building collapses, bad roads, and loss of lives and property.

Working to solve these problems by creating lasting solutions, the Nigerian government is set to leverage PPP as its core strategy in the financing of infrastructure projects.

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The World Bank puts it thus: a PPP is a long-term contract between a private party and a government agency for providing a public asset or service, in which the private party bears significant risk and management responsibility.

Furthermore, PPP is a broad term that rightly describes the multitudes of structures put in place to pave the way for private sector involvement in the provision of public services.

Today, we have seen that it ensures optimal use of resources as well as efficiency in service delivery, translating to an increased value for money as a result of the utilisation of private sector expertise and technology. This further leads to superior products and services at a lower cost.

Looking at infrastructure in Nigeria, this particular strategy is borne out of a desire to solve Nigeria’s huge infrastructural needs coupled with inadequate funding for such needs. It has the capacity to both meet these needs and generate the requisite funds for the provision and management of this infrastructure.

Interestingly, the PPP strategy has not only helped governments to procure long-term infrastructure services from private providers but has also brought about additional benefits for other stakeholders. Private companies, for instance, have the opportunity to develop knowledge, experience, and skills, which can be constructively reapplied elsewhere.