Capital intensive projects which are long term assets and require huge amounts of funding should be managed by the government and not the private sector, Babatunde Fashola, minister for Works and Housing has said.
“There are some assets that are just social assets only government can build them; they are not even the business of private sector,
Fashola, who spoke at ‘An Evening with the Minister of Works and Housing’ hosted by the Lagos Business School recently, explained that although the government is interested in driving Public-private partnership (PPP) for infrastructure development, sometimes the cost of funding can only be carried by the government.
“When we are talking about PPPs and infrastructure, the kind of infrastructure we are talking about is not money under the table, it is in billions of Naira, How many companies even turn over a billion naira? So there are some things that we must understand that the private sector just doesn’t have the capacity to deal with,” he said
He mentioned that most investments are made in order to get returns but not all investments particularly in infrastructure will offer returns, explaining that in building airports, investments in terminal buildings will provide returns as economic activities take place which gives room for private sector involvement.
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“But no bank will finance you to build a runway, how much money do you get from landing? So those are the kinds of things that government should focus on, also nobody will come and build rail or invest in tracks, a 100-year asset which financing is going to match it?” he said,
Fashola said that the Lagos-Ibadan expressway construction was stranded as banks were not willing to lend N200 billion to individuals or groups, adding that the project should have been carried out by the government initially.
He revealed that during his administration as the governor of Lagos state, he tried to partner with 10 banks and many private groups to build houses as a means of fostering public-private partnership however there were no takers for the project due to the conditions involved.
The minister also advised the need to stop the use of ‘extreme figures’ for the country’s state of affairs, as the use of ambiguous data, creates unnecessary anxiety and promotes poor publicity of the government’s efforts at improving the country.
“When we launched the infrastructure master plan of 2013, we used to quote $10 billion every year that we must spend, now it has gone to $100 billion but most of the projects that we quoted for in that infrastructure master plan this government is doing them now, second Niger bridge is there, Bodo-Bonny is there, the rail and airports were there, so where did these numbers come from?” he said.
He highlighted the 17 million housing deficit which he says does not exist as the figures were attributed to his predecessor’s foreword in the 2012 National Housing policy document, without a proper source.
“Somebody was reporting that there are 350 million small and light arms in Nigeria and when I checked for 20 years that the US funded war in Iraq, Iran and Afghanistan, it was only 1.6 million arms for 20 years, so where is the 350 coming from? Because we just play with these extreme figures and then they create a race that is impossible to meet,” he said.
