Why Nigeria fared poorly in infrastructure provisioning – Omisore

Why Nigeria fared poorly in infrastructure provisioning – Omisore
United Bank for Africa

A former deputy Governor of Osun State and one time Senator of the Federal Republic of Nigeria, Senator Iyiola Alani Omisore, Phd., FNSE, CON, has identified several factors why the Nigeria’s infrastructure development has not moved beyond the rhetoric.

Senator Omisore who recently completed his doctor of philosophy degree in Infrastructure Finance with specialisation in Public Private Partnership from the prestigious International School of Management, Paris, was a guest speaker on Day 3at the on-going 2016 African Engineering Conference, organised by the Nigerian Society of Engineers (NSE) in Uyo, AkwaIbom State. The occasion also served as the NSE’s Annual General Meeting and the UNESCO African Engineering Week.

In his presentation, titled, “Nigeria’s Infrastructure Deficit:  Beyond The Limitation of Finance In Public Private Partnership and Project Procurement Options”, Dr.Omisore explained global perspectives to public private partnership (PPP) as best approach to infrastructural development, and the parochial factors militating against its successful implementation in Nigeria.

Hitherto, before PPP became the norm, it was the arrangement by which roads, railway, electricity and water services were provided, the world over.Whereas,  countries outside sub-regional Africa has had a major paradigm shift in public  procurement, countries within the sub-regional African continent, Nigeria inclusive, are yet to avail themselves of  the  opportunities and advantages in the provisions of public  services and utilities, as offered by the PPP model, for their peoples, thereby expanding the scope of their socio–economic  developments.

“While it is recognised that the PPP model has been deployed to execute a few public projects in Nigeria, its utility value has been mostly felt in Lagos state where the authorities  have  partnered with private sectors for  design, finance and management  of public utilities. Even then, the projects involved are hardly ones that can recommend   themselves to a sustainable management status under an ideal PPP model. Outside of Lagos State,

“Outside of Lagos State, cursory survey of the infrastructure procurement by state governments is still largely tied to the old model of contract awards to private firms to execute a project designed and financed by governments. Thus, on the average, Nigeria has fared, rather poorly, especially in view of the country’s need for requisite infrastructure for nation’s potential developmental capacity”.

Speaking further, Dr Omisoresubmitted that “my intervention in the following submission is anchored on a very straight forward argument to the extent that, even with real needs and potential returns on investment by investors, inadequate provisions in the legal framework to sufficiently safeguard investors and financiers interest, may continue to constitute major road blocks for Nigeria at all levels of authorities in the country’s PPP drive for the much needed public procurement of utilities and services. The critical point to be made here is that, though, there seems to be shortage of investable funds in the International Market, but Nigeria crisis seems compounded by the integrity profile of our legal framework for an ideal PPP model.

“In the final analysis, and without going into the details of the shortfalls in the legal framework, as has been identified in many  studies, see, for instance, Essia and Yusuf, 2013, suffice to say, however,  that  the  Infrastructure Concession Regulatory  Commission    [ICRC] Act  of  2005, the Public Procurement Act 2007 regulations issued by ICRC governing  the  PPP process and  various state laws as described in each State’s PPP policies  falls  short  of necessary regulatory  framework for proper implementation of  PPP projects, most  importantly  with respect  to  dispute resolution during the tenor of the contract. Yet, the apex bank should make concerted efforts to offer assistance to commercial and industrial banks to enable them offer financial skills required in PPP management”

In Nigeria, there is a misconception of the conceptual framework of public private partnership. PPP has become a generic term to describe plethora of contractual business relationships and management indices between governments [national, state and local, including their respective agencies] and private sector- that may be promoters and financing Institution, i.e. banks.

In some PPP model, project financiers [banks] may be part of contractual  arrangement as investors, thereby part of the  risk-sharing, with  a view  of participating  in the accruing  profit and also  losses  from such business undertakings. It suffices, however, that this arrangement is not popular in ideal PPP model for public procurement, as some financial regulations preclude banks from getting involved in business ventures beyond their statutory function of managing public funds, committed to the procurement of public infrastructure.

Explaining some of the critical factors affecting successful implementation of PPP model, Dr.Omisore emphasised that “it is important that we do not gloss over the political and cultural issues that often constitute major disincentives to public procurement, via PPP arrangement.

“One of the issues is absence of political will on the part of an administration to see through the policies of a previous administration. And  because   concessionaires  are  aware  of  a  negative   tendency  by  a new  administration   not  to honour, to  the lather, all the tenets of an arrangement  by a departed  administration,    they  are often inclined to speed up the commissioning of projects before the date of departure  of a  sitting  administration,  with avoidable  increase  in the cost  of project. Yet, except  there  is a  determination  that a PPP succeed,  there are vested  interests   in  a  country,  especially in a multi-faith  and multi-ethnic  country  like  Nigeria  to  ensure  that  the  governments initiative  to  promote PPP  as  a  policy  fail.

“Public-private  partnership projects often  encounter  serious  resistance  from  labour unions,  civil  service  employees and  sundry   socio-economic  interest groups. Also,  present  is the negative  understanding  by  the  general  public, borne out of ignorance,  on the strategic  importance of PPP in a  nation’s socio-economic development. Whereas, PPP, are  meant to  be partnership  contractual arrangement   between  the public  and  private sectors of  the economy, in which  responsibilities, risks and  obligations, are  to  be  shared  by  both  sides   in  order  to  guarantee  the  greatest benefits to the public.

He concluded by expressing his regrets that“in  Nigeria, a segment   of  the  public  service  operators  tend  to see  the  private  sector   concessionaires   as  the  enemies that  would deprive   them  of  their  jobs, therefore,  to  be overcome at  all cost. And this  is  often  achieved  when  some  extant  rules in  the civil service are  exhumed  to  advise  the  government   on  why all  of  a PPP undertaking,  or some  aspects of  PPP  project  agreement  should  not  be  honoured, thereby  leading  to government unilaterally rebidding on contracts voluntarily  entered. Moreso,  with a  weak  legal  framework, under which concessionaires can be protected, the tendency is for the  private  sector operators, both from within and from outside of the country, to be wary  of doing business with government. Thus, timely procurement of public utilities suffers and the socio-economic development and the country is the worst for it”, Dr Omisore emphasised.

The conference, held at the Tropicana Conference Centre, Uyo, AkwaIbom State, was themed, “Adequate, Reliable and Sustainable Energy in Africa”. It was heldbetween November 21st – 25th, 2016 in conjunction with the Federation of African Engineering Organisation (FAEO), and the United Nations Educational, Scientific and Cultural Organisations (UNESCO), and was attended by over 600 delegates from across the world.