Nigeria must fix infrastructure to compete in AfCFTA – NECA
Against the backdrop of the African Development Bank’s (AfDB) prediction that Nigeria would require some $3 trillion over a 26-year period in infrastructure investment, the Nigeria Employers’ Consultative Association (NECA) has asked the Federal Government to explore the option of Public-Private Partnership (PPP) in levelling up the country’s huge infrastructural gap.
Speaking at the 64th annual general meeting of the employers’ body in Lagos on Thursday, Taiwo Adeniyi, president of NECA argued that the need to invest in building infrastructure couldn’t have been stronger at any other time, given that Nigeria just signed to the Africa Continental Free Trade Area (AfCFTA) agreement. He believed local businesses and manufacturers urgently need critical infrastructure that aid productive activities to be able to compete in the continental market.
“As we have reiterated in many fora, a successful PPP structure is required to bridge the infrastructural gap that will enhance the competitiveness of the nation in the Africa Continental Free Trade Agreement. Exploring alternative financial sources, such as the PPPP framework, would be required to accomplish this,” he contended.
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Africa’s largest economy’s infrastructural deficit is being worsened by volatility in oil prices which, sadly, constitutes its major source of revenue. Over the last decade, the country has relied heavily on international and domestic borrowing to fund its annual budgets, a development analysts say limits the economy as a chunk of revenues accruing to the federation account goes into debt servicing.
According to the National Bureau of Statistics (NBS), Nigeria’s total public debt stood at N32.92 trillion by the end of the fourth quarter of 2020.
Speaking on this also, Adeniyi said the increase in public expenditure and constraints in revenue mobilisation over the past year have contributed to the public debt problems. He warned that continuous rise in government borrowing and huge debt servicing obligations may have a long-term negative impact on the country’s capacity for improved development.
On how to tackle this challenge, he said: “Innovative strategies for public financial management in the form of debt for development should be considered. Further, the underlying issues of the growing debt such as high cost of governance, poor management of natural resource revenue and high tax evasion should be addressed.”
According to the NECA president, while it has been touted that the debt-to-GDP ratio is still within a manageable threshold, the reality remains that the nation can hardly bear the burden of the overwhelming debt servicing, which deprives the nation of needed funds for development.