Lack of funds stalls Nigeria’s infrastructure dream

Lack of finance is stalling the execution and delivery of infrastructure projects in Nigeria.

Several projects are currently abandoned or stalling due to a lack of funding to complete them.

Works minister David Umahi said recently that most projects in the country were uncompleted, revealing that over N16 trillion was required to complete them.

Also, the Transmission Company of Nigeria (TCN) said that it requires at least N1.7 trillion to complete 129 projects critical for the effective transmission of electricity across the country.

Experts say the government must now begin to leverage private investments while utilising the private-public partnership model to fund projects.

Oluwatosin Iseniyo, research analyst at BudgIT Foundation, emphasised that the core of the issue lies in the significant shortfall in government revenue, which has severely affected the implementation of numerous capital projects, including those overseen by the Ministry of Power.

He noted that the 2024 budgetary allocation for the Ministry of Power remains minimal at N418.37 billion, representing just 1.45 percent of the total budget.

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“This amount constitutes only 22 percent of the total infrastructure budget for the year. Notably, the 2023 budget for the power ministry was even smaller, standing at N258.49 billion, which amounted to a mere 1.18 percent of the total budget and 21 percent of the infrastructure budget. Despite its critical role in driving change in Nigeria, the Ministry of Power has consistently been underfunded.”

To address these challenges and enhance project funding, Iseniyo advocated government collaboration with the private sector.

“The Ministry of Power, for instance, can partner with private organisations to pool resources and expertise. The Ministry of Power, for example, should focus on core projects within its scope and avoid taking on projects outside its mandate, such as those related to agriculture, works, water resources, among others. Prioritising projects within their remit will enable ministries to concentrate on completing key projects rather than spreading resources too thin across unrelated ones.”

Adetayo Adegbemle, executive director at PowerUp Nigeria, said that there is a need to ensure policies that assure investors of getting back their investments when due. For him, attracting private-sector investment is critical to ensuring the effective delivery and sustainability of projects.

“I would have preferred that the government had worked more on policies encouraging private investors and showing them clear paths to cost recovery, especially in funding electricity projects. If investors are sure of getting their investments back, you will see them bring in their investments for these projects.

“That is what the government should do. They should think of how they can get investments. For example, if we have the private sector leading the metering project, they will take ownership of it, they will be the ones to ensure that people are not bypassed by effectively monitoring the meters. Also, investors can get back their money from the tariff that is being charged.”

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For Chijioke Ekechukwu, chief executive officer of Dignity Finance & Investment Ltd, while the government can leverage the PPP arrangement to fund infrastructure projects, it must also ensure mechanisms to ensure investors get their funds back.

Speaking on the activities of the Infrastructure Concession Regulatory Commission (ICRC), Ekechukwu stressed the need for the government to empower the agency with the resources needed to carry out its operations.

“That agency may be willing to do all those concessionary things, but if the government does not take them seriously, then there’s nothing they can do as an agency. That’s just the way the government works. So, the government must be very intentional about what they want to achieve. And if they are intentional about what they want to achieve, then they have to empower them to do their work and to take charge.”

Ishaq Ibrahim, an Abuja-based economist, decried the continuous show of indiscipline in government, stressing that government officials have continued to express greed and undermine details of contracts, dampening the relationship with the private sector.

“The government as a party in these agreements most of the time does not keep to its part of the bargain. There has to be a more structured policy to guide PPP arrangements in Nigeria. Lack of transparency and accountability breeds distrust between a government and citizens. This is what we see in these projects. No private firms want to trust the government’s system anymore.

“Indiscipline is another issue, which gives an impression of lawlessness in any country. Before we talk about private and public partnerships, do you think this government recognises the private sector, I don’t think so. No one will enter into any such agreement with a government that has seemed to be above the law.”