Nigeria requires $14 billion every year to close its infrastructure gap, according to the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo- Iweala.
According to her, the Federal Government currently spends about $6 billion on infrastructure, but will soon jack up the amount to $10 billion.
The minister said on Monday in Abuja while declaring open a training programme on Public Private Partnership arrangement (PPP), organised by the African Development Bank (AFBD) for stakeholders, that the funding gap would be bridged through the PPP.
She added that government had long imbibed the concept of PPP in executing key projects across the country and listed such projects to include the Lekki Deep Sea Port, Lagos- Ibadan Expressway and the Second Niger Bridge.
“I am proud of what ADB is beginning to do in Nigeria and all over West Africa, which this hub will serve. For Nigeria alone, we need about $14 billion a year equivalent for infrastructure investment; about $10 billion of that at the Federal Government level alone.
“But we are only investing about $6 billion all through the country. What it means is that there is a big gap, especially as it is without the costing of a new infrastructure master plan which we are still waiting for.
“What I am just given is just figures that are not even complete because it did not encompass all of the cross-cutting type of infrastructure in the master plan.
“But even if it is a conservative figure, we already have a gap and like many countries in the world, since budgetary resources and private sector investment alone will not be able to fill this gap, we have to look for other models of financing and that is where the PPP model comes in.
“We have really struggled to establish this model by trying to concession certain things like our ports; we also have some other public private sector projects we are looking at.
“More importantly, we have this feeling that we never get this model right the way it should work. We also lack the technical capacity to support the PPP projects going on, which was why government established the Infrastructure Concession Regulatory Commission (ICRC).
“Most infrastructure ministries have established PPP units, including the Ministry of Finance since it was clear that some of the financial implications of this signed PPP arrangements were not very crystal clear to those signing them. We found some agreements that cannot just work.
“We will have some regional and sub-regional infrastructural projects to be done on PPP basis since the type of resources needed are very difficult for government to muster. We have to involve the private sector, the right type of structure, legal agreements and the right kind of financing to make it work.
“That is why personally I am quite excited at this PPP hub,” the minister said. She tasked participants to identify some of the challenges inherent in PPP arrangement for immediate rectification.
However, a problematic area she pointed out is the amount of time needed to complete a PPP project, saying that studies have shown that it takes seven years to complete a PPP project in Africa.
“This is too long. For policy makers and political leaders who are operating on a four-year term, seven years to deliver a project which they have promised the people is not very attractive.
“The difference in time horizon between policy makers and technical partners needed to be reduced. PPPs need to be processed faster,” Okonjo- Iweala stated.
She also stressed the need to overhaul the legal framework guiding PPP, saying that the way its presently framed puts government at a disadvantage.
“Sometimes the legal arrangements are too complicated in my view. We will like to have a legal framework for PPPs. It is fairly straightforward that risks are shared appropriately. Some of the frameworks and agreements I have seen, load virtually every risk on the government while the private sector partner works away with very little risk,” she said.
Earlier, AFDB Country Representative Dr. Ousmane Dore, had lauded the conference, saying the bank is involved in the monitoring and supervision of some projects executed under PPP arrangement by establishing PPP advisory board.