Nigeria’s huge infrastructure deficit stunts economic growth – Atiku

By Tunde Opalana

Presidential candidate of the Peoples Democratic Party (PDP), Alhaji Atiku Abubakar has blamed stunting economic growth on the nation’s huge Infrastructure deficit.

He said private sector participation in infrastructure development will be beneficial to the economy.

Atiku advocated development of the critical infrastructure as needed to unleash the full potentials of the nation’s economy.

He said this in response to the reaction of the observations by the National Union of Electricity Employees (NUEE) to his agenda as it relates to the development of the critical infrastructure in the country.

In a statement by his media adviser, Paul Ibe, the former Vice President appreciated the fact that Atiku Abubakar’s policy prescriptions contained in “My Covenant With Nigerians” are getting due attention.

He said his objective is to have Nigerians, who will be the beneficiaries of the policy framework to interrogate it.

Atiku emphasized that actively promoting private sector participation in infrastructure development will be beneficial to the economy and that it is also inevitable that we incentivize the private sector to take risk and invest in the economy for the following reasons.

“There is no telling that Nigeria’s huge infrastructure deficit is making businesses uncompetitive and stunting economic growth. The supply of efficient infrastructure, including roads and rail transportation, communication, adequate power etcetera is extremely important for the economy to grow and create much-needed jobs.

“Therefore, to build the economy of our dreams, we must increase the stock and improve the quality of our infrastructure. Inadequate infrastructure has been identified as the most problematic factor for doing business in Nigeria.

“In terms of actual spending, Nigeria currently spends less than 1percent of its annual GDP on infrastructure as against the required levels of between 3 percent and 5 percent of annual GDP. This shortfall has created a deficit, estimated at USD 3 Trillion over the next 30 years. Our overwhelmed public sector does not have the resources or expertise to deliver. While our financing requirement is approximately 100 billion USD per annum, Nigeria’s entire budget is only USD 30 billion. The National Development Plan envisages that 80% of all investments will come from the private sector.

“Regrettably, Nigeria’s core infrastructure sectors are not operating efficiently. Almost all the infrastructure sectors from roads, railways, housing, power, and energy are operating below potential. Over the years, we have observed how these enterprises consume huge public resources while offering poor quality services. Many of these State-owned Enterprises have become a source for political patronage, corruption, and rent seeking to the detriment of Nigeria’s long-term economic growth.

“For example, Nigeria’s refining infrastructure remains poor despite the perennial injection of unending public resources for turnaround maintenance. The country’s refining capacity per capita is 0.002 bpd/capita compared to Libya’s 0.06 bpd/capita and South Africa’s 0.01 bpd/capita. As of today, Nigeria imports over 80% of its refined products to meet its current needs and is said to be the largest importer of PMS in the world, with significant balance of trade implications.”

Sadly, he insisted that the fiscal cost of maintaining these State-Owned Enterprises is enormous, and it comes with even greater opportunity costs.

He stated further that “by holding unto these underperforming enterprises, Nigeria is sacrificing investments in critical areas, including education, health, water, sanitation, and rural infrastructure. For example, the first phase in the rehabilitation of Nigeria’s refineries is expected to gulp US$1.55 billion!

“With its current precarious fiscal position and daunting development challenges, Nigeria cannot afford to forego productivity enhancing investments in human capital development and channel scarce resources to moribund enterprises.”

His vision as encapsulated in “My Covenant With Nigeria” aimed at driving private investment to shift Nigeria from being a “net importer” to a “net exporter” of petroleum products and become the refining hub of the entire West Africa region.

“We cannot hope to achieve this without extensive reforms to restore investor confidence which is currently at its lowest ebb. The active participation of the private sector in the downstream sector will help drive efficiency and healthy competition in the oil and gas sector.

“According to the Bureau of Public Enterprises 67 percent of the 142 privatised firms are performing. It must be noted that several firms, not just liberalised enterprises, are facing business environment challenges in Nigeria. Many have closed and or been forced to relocate to neighbouring countries because of the poor business environment.

“There is no denying the fact that Nigeria has derived enormous benefits from the creation of a liberal environment to facilitate private sector participation in key sectors of the economy. Today, the IT sector is undeniably the fastest growing services sector in the Nigerian economy. We need to replicate these efforts by extending the reform initiatives to other sectors.

“Of course, different countries have implemented liberalisation programmes with varied outcomes and over time and space just as other policies. But it is easier to point to success stories around the world: from Vietnam to Mexico; from Indonesia to South Africa and Egypt etcetera than outright failures. For the avoidance of doubt, liberalisation and deregulation programmes have supported the private sector to unleash its growth potentials and enabled these governments focus on investing in education, healthcare, poverty alleviation, water and sanitation with such proceeds,” he said.

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Atiku posited that every reform measure has the potential to create difficulties especially in the short-term, but with a positive impact on incomes, employment, and poverty, over the medium and long-term.

He said liberalised firms may face difficulties as they transit from the old culture of rent seeking and dependence on government for survival, to a new business culture that is driven by efficiency and competition, but he will ensure that his economic reform measures are accompanied by a series of mutually supportive activities aimed at easing these difficulties and making the reform measures impactful.

While not holding brief for the BPE, he said the agency is best suited to answer some of the questions raised by NUEE for example, who bought the companies and what process was followed etcetera.