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Nigeria’s infrastructural deficit: A clarion call for private sector investment

Nigeria’s infrastructure deficit has been one of the biggest factors holding back its growth and development. The value of Nigeria’s total infrastructure stock represents only 35% of GDP, significantly below that of emerging economy average of 70%, according to the country’s Debt Management Office, with the World Economic Forum’s 2019 Global Competitiveness Index having ranked Nigeria 116 out of 141 countries, largely due to the poor state of its infrastructure.

The sector has been bedevilled with a myriad of challenges ranging from the lack of adequate fiscal revenue, weak institutions, lack of accountability and limited policy consistency across different administrations to poor regulatory framework, compounded by graft and the limited maintenance of existing infrastructure and exacerbated by a rapidly growing population, all of which add strain on the already inadequate infrastructure stock. Instability in the political landscape and increased vulnerability of the nation to social violence and terrorism has also served to deter investors, factors which have left the country’s economy grossly in deficit in infrastructure, with a financing shortfall for infrastructure estimated at a staggering $3 trillion over the next 30 years.

However, the problems go beyond funding, given that billions of dollars have been sunken into infrastructure projects that have failed to see the light of day or have been abandoned after construction, with 11,866 projects identified and recorded by the Federal Government established a Projects Assessment Committee in 2011to have been abandoned for a myriad of reasons, leaving the country’s geographic terrain littered with abandoned infrastructure projects.

With an infrastructure deficit estimated at $100 billion annually, projected at $34.51bn.2,3 annually, and the country’s currently strained public finances, private participation is indispensable to adequately finance infrastructure projects.

More than ever, the future of Nigeria depends on its ability to build and modernize its infrastructure, particularly in mainstream sectors, which form the foundation for socio-economic development: creating employment, reducing poverty, increasing disposable income, improving the environment and enhancing standards of living.

The overwhelming necessity therefore to prioritise basic physical infrastructure cannot be over-flogged in catalysing progress across multiple systems towards massive economic growth. This calls for an urgent need to leverage the private sector capital in a variety of ways such as creating special purpose vehicles for financing creations and drive, while developing public-private partnerships, and investment.

Fortunately, there remains vast potential for large infrastructure projects within the country. Government must build a track record of public-private partnership (PPP) performance to attract large sums of long-term funding from pensions funds and insurance.

PPP will enhance a better allocation of risks between public and private sectors and facilitate efficiency in the provision and management of these projects which will impact positively on the country’s economic growth trajectory and support job creation and the industrialization of the Nigerian economy

It is no gainsaying the fact that apart from her natural endowments, Nigeria is blessed with a deluge of human resources; vibrant men and women whose investments continue to impact global finance, technology, medical, oil, legal and indeed the whole shebang of the global economy; investors such as businessman and founder of Zenon Petroleum, Femi Otedola whose investments span finance, trading cutting through insurance, shipping and real estate.

Another is economist, entrepreneur, investor and chairman of Heirs Holdings and United Bank for Africa Tony Elumelu who with TEF is championing entrepreneurship in Africa. He is fostering entrepreneurial development across Africa, providing the much-needed funds, training and mentorship of commercial enterprises that promote social and economic change, while supporting growing African businesses through dynamic programmes that provide capital and human resources to budding entrepreneurs. TEF has been providing scale sustainability for great investment ideas to take flight, with the objective of ensuring job creation and catalysing economic growth.

There’s also astute lawyer and investment banker Adebayo Ogunlesi to mention but a few, who bought the London Gatwick airport and reversed its fortunes, unceasingly making remarkable impacts in the global investment circle; men in different spheres of expertise who have served to instil a sense of economic empowerment for the long term, knowing that the private sector must create both social and economic wealth in ensuring economic development.

The clarion call is now for more investors of this ilk to revamp Nigeria’s infrastructure sector; trained trusted, experienced and passionate professionals who can change the country’s infrastructure investment climate for the better, promoting sustainable socio-economic development through the provision of apt and adequate infrastructure.

This crop of investors is not in short supply and at this critical period when the country direly needs investment in infrastructure to drive economic growth, provide jobs, and deliver vital services to the country and the majority of its citizens, there couldn’t be a better time to respond to that call.

A technocrat and investor who fits the mould of Ogunlesi, reputable lawyer, chartered accountant, PPP & infrastructure finance adviser and seasoned investor, George Nwangwu readily comes to mind. An expert in corporate, project and development finance, whose experience in the oil and gas, power and telecommunications sectors, mergers and acquisition terrains as well as years of experience as a lawyer and academician in Nigeria and the UK are as extraordinary as they are inspiring.

Nwangwu’s professional trail leaves a colourful string of achievements. As managing partner of Ratio Consulting Limited, Nwangwu has worked in a lead consulting capacity on several projects across Africa. With wide experience in company law and practice, project finance, infrastructure regulation/finance and public-private partnerships, Nwangwu as an international consultant to multilateral institutions, has been involved with framework issues in the field of infrastructure/utilities regulation and finance, Energy Law, Project management, environmental law, Public-Private Partnerships (PPPs), providing full support to government agencies and mineral exploration and production companies. In this role, he has been responsible for the development of a number of legal and policy instruments around private finance for infrastructure across a number of African countries including Nigeria.

As head, Strategy and Multilateral Relations Unit of the Bureau of Public Enterprises (BPE), Nwangwu managed the outcomes of transactions relating to the IDA Privatization Support Project (PSP). He coordinated the execution of transactions within the different departments and transaction managers in the Bureau, ensuring compliance with World Bank processes, and that the Bureau met the stipulated Project outcomes and key performance indicators (KPI’s) as agreed between the FGN and the World Bank.

He helped in the formulating, executing and monitoring of the Bureau’s strategy and liaising, ensuring effective and efficient reporting to the World Bank on the execution of privatization transactions and the reform program, under which role he superintended the consummation of transactions in the Power sector, transport sector (including railways, roads, National Inland Waterways) Oil and Gas (NGC and PPMC), Telecommunication (NITEL) and other major industries, participating in the conclusion of over 100 transactions.

Nwangwu provided general and sector-specific legal and regulatory advice on sectors and sub-sectors slated for privatization or commercialization, such as the Power, transport & aviation, Mining, oil & gas and manufacturing sectors to ensure the promotion of infrastructure and utility efficiency, satisfying demand, thereby protecting consumers and users against dominant operators while protecting investors against government action.

George Nwangwu was also PPP Coordinator at Federal Ministry of Finance and Special Adviser to Dr. Okonjo Iweala, as Coordinating Minister of the Economy and Hon. Minister of Finance, on infrastructure Finance and PPPs. In this role, George Nwangwu was responsible for initiating the construction of the Second Niger Bridge, the rehabilitation of the Lagos- Ibadan Expressway and the development of the coastal railway project to mention a few of the transactions.

As an entrepreneur, George Nwangwu has been responsible for delivering some of the most important infrastructure projects in Nigeria over the last decade. For example, he is co-founder of North South Power Company Limited, concessionaires of the Shiroro and Gurara hydroelectric dams. He is also the founder of Universal Elysium which has some of the largest concessions in the agriculture and port sectors in Nigeria in its portfolio. His other investment vehicle, Pan African Global Infrastructure Company Limited is the concessionaire to Bakalori dam, zobe and Jibya dams.

A lecturer with vast experience within and outside Nigeria and prolific writer, Dr. Nwangwu is a research fellow at the Department of Mercantile Law, Stellenbosch University and also Honorary Senior Research Associate in the Bartlett School of Construction and Project Management, University College London. He is an alumnus of the University of Lagos Nigeria, University College London, University of Hull and the University of Oxford.

Nwangwu’s antecedents in the public and private sectors of the Nigerian economy, effectively participating in the consummation of over a hundred privatization/ PPP transactions worth over $20 billion either on the side of the public sector or private sector in Nigeria, naturally place him on high premium as a prospective investor in the infrastructure sector, and others like him willing to carry out shrewd investments in the infrastructure space and further contribute to the growth of the private sector as well as the general economy.

The global fiscal space is constrained, and with government borrowing rising, Nigeria looks clearly a promising destination, with regard to infrastructure investment, standing at the acme of countries with the best return on investment; and for a market with a very high youth population, projecting very active demand power, the country’s infrastructure sector is certainly a market for any smart investor.

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