Maintaining the Momentum on Infrastructure Investments

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Economic infrastructure refers to part of an economy’s capital stock used to facilitate economic production, or serve as inputs to production (e.g. electricity, roads, and ports). It can further be subdivided into three categories: utilities (power, piped gas, telecommunications, water and sanitation, sewerage and solid waste disposal), public works (roads and water catchments in dams, irrigation and drainage) and other transport sub-sectors (railways, waterways and seaports, airports and urban transport systems).

Infrastructure is indeed an important factor for judging a country or region’s development. No wonder, the World Economic Forum (WEF), Global Competitiveness Report 2013-2014 ranked Nigeria 135 out of 148 economies on infrastructure. The bleak picture of infrastructure deficiency in Nigeria is compounded by rising population and unprecedented urban growth. And the consequence of this decay is a drag on our economic performance.

According to the WEF, extensive and efficient infrastructure is critical for ensuring the effective functioning of the economy, as it is an important factor in determining the location of economic activity and the kinds of activities or sectors that can develop within a country.

Well-developed infrastructure reduces the effect of distance between regions, integrating the national market and connecting it at low cost to markets in other countries and regions. In addition, the quality and extensiveness of infrastructure networks significantly impact economic growth and reduce income inequalities and poverty in a variety of ways. A well-developed transport and communications infrastructure network is a prerequisite for the access of less-developed communities to core economic activities and services. Economies also depend on electricity supplies that are free from interruptions and shortages so that businesses and factories can work unimpeded

The lack of infrastructure has been an impediment to Nigeria’s economic development and a major constraint on poverty reduction, as well as the attainment of the Millennium Development Goals (MDGs). Over the years, diverse government policies and investment in maintaining existing infrastructure which relatively lagged behind contributed to the infrastructure decay, which brought about poor erratic power supply, pitiable water supply, as well as insufficient road networks between urban and rural areas.

Nevertheless, over the last 10 years, both the federal government and some state governments have prioritized infrastructure in their budget allocations and investment. For instance, federal government’s efforts at boosting investment in the provision of infrastructure in the country through Private Sector Participation (PSP) led to the establishment of the Infrastructure Concession Regulatory Commission; the Presidential Task Force on Power was established to drive the implementation of the reform of Nigeria’s power sector; and the Nigeria Infrastructure Fund (NIF) focuses entirely on domestic investments in selected infrastructure sectors.

In recent times, the federal government has announced that it will commit $1billion to scale up the improvement of gas infrastructure to power the various power plants in the country; International Finance Corporation, (IFC) was reported to have invested 25 per cent, about N60billion of its 2012 total investment in Nigeria on infrastructure; $7billion was invested in the Mambilla Hydro Project which has a capacity to deliver 3,050 megawatts to the grid and National Independent Power Project (NIPP) power plants are springing up. Furthermore, Aliko Dangote, Africa’s wealthiest man is committed to invest a combined $5 billion by 2019 with New York-based Blackstone in power projects in sub-Saharan Africa, and he has also formed a joint venture with Washington-based Carlyle to invest an unspecified amount in Nigerian oil and gas ventures and other sub-Saharan projects.

No doubt massive investments towards ameliorating the infrastructure deficit are on-going and the investments are yielding results.  If this current trend in infrastructure investment is continued over the next four years, Nigeria is bound to leap frog in competitiveness ranking amongst other economies. However, efforts must be made to ensure implement the road maps like the National Integrated Master Plan while protecting these investments from sabotage.

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