Dearth of Infrastructure bane of low economic growth –Says Akhator-Eneka
.Tells FG to use experts in projects execution
.Government must not borrow for consumption
By Udeme Clement
Mr. Wilson Akhator-Eneka, Oxford Scholar, author, PPP Consultant in Infrastructure Development and Finance, based in Abuja. He spoke in this interview on external borrowing from China, importance of infrastructure development in economic growth and other current issues in the economy. To him, Africa is either by commission or omission marching towards the second phase of colonisation.
Dearth of infrastructure has been identified as one of the major factors militating against tangible economic growth in Nigeria. What is your take on this?
To start with, Infrastructure encompasses a whole gamut of so many things inclusive of roads, bridges, schools, hospitals and real estate. Recent researches have shown that Infrastructure has both hard and soft components.
For instance, Infrastructure can equally be seen as a process by which profound activities are carried out. As such, infrastructure is imperative in economic development.
Very readily, it is self evident, society economic activities cannot take place without infrastructure hence, it is almost impossible to speak of economic development in place of absence of infrastructure. Consequently, it could be seen as the very fabric with which the economic development of any nation is clothed. Literally, without infrastructure, such a nation is naked and exposed to harsh reality of vagaries of nature and this is putting it mildly.
Are you saying infrastructure is a prerequisite for economic development?
We have to understand what economic development means. In reality, economic development ultimately addresses the intersections between people and ability to meet their daily needs. In order words, economic development does not just happened for the sake of it. Rather, it is a derived function, a means to an end. Now, to demonstrate its importance, if you have cash crops in Ore, there is a processing plant in Ogun state, the seaport is located in Lagos to ship and there is a local market for the bye products in Kaduna; the intersections between Ore, Ogun, Lagos, Kaduna and the cash crop is provided by transport and mobility. If there are no means of moving these crops and no processing plant to covert the products from one form to another, guess what will happen; the crops will simply rot away. So, infrastructure in this case – road and plant are critical; so is the seaport.
Therefore, if we take social infrastructure such as hospital or school; again these are derived activities, function or demand. Without hospital, you cannot have sound health to engage in production. Also, without school you cannot envisage a future with adequate skills to fuel economic activities. And without economics activities, you can’t possibility speak of development. It’s a vicious circle, regrettably there is no escape route or short cuts; you just must do it – deliberately promoting infrastructure, in order to project economic development.
However, this is different with more advanced countries. Right now, they are looking at societal transformations and infrastructure intersections; looking at the concept of optimal or marginal utility of additional infrastructure investment. Understanding the linearity of Infrastructure and societal transformations in developing economies, you are right, they remain critical to economic development and growth.
At present, looking at the development concept in Nigeria, why are we not talking more of human capital development?
With due respect, many people who speak of infrastructure are only looking at the tiny side of the coin. Infrastructure has a wider meaning than many thought. New researches in this field have demonstrated this. Human capital development is part and parcel of infrastructure.
How do you mean?
It is the soft side of infrastructure. Human capital development is predicated on a number of associated factors. First, human capital to achieve what? human capital for what purpose, age, market and sector? To effectively conduct human capital development; both hard and soft sides of infrastructure are required.
Listen to this experience about classmates of mine, at Oxford University when we studied “health, well-being, mobility and transport”. About four of them are doing PhD theses on the benefits of using bikes as alternative options in transport. The theses are being sponsored by their governments – in Poland, Italy and UK. These kinds of knowledge are specific to solving societal needs and accelerating economic development.
I suspect this is what you meant by human capital development. Yes, human capital development remains the foundation of all infrastructure advancement. It is needed. Again you couldn’t possibly conduct it, without the hard part of Infrastructure such as schools, books, training and materials.
What is the true state of infrastructure development in Nigeria at the moment? Can you give examples of key infrastructure projects in Nigeria capable of driving development process in line with global standard?
Well, I have not conducted empirical research to authoritatively say that, these are the kinds of infrastructure available in Nigeria, I would be glad to conduct one, if there is a sponsor. However, permit me to say MM2 started well. Lekki toll has to an extent been able to solve some problems. And there may be other Infrastructure projects on-going in the Country. About three years ago, we conducted economic study to determine the viability of water transport to ease transportation in Lagos. Our findings revealed that Lagos lagoon needs dredging, without which investors are not willing to put their money. Again, one was privileged to be associated with some investors (indirectly), who wanted to invest in Lagos Dock yard.
I assisted as the lead PPP adviser on an Africa Development Bank sponsored project on the conversion of 23 moribund centres to six industrial clusters. These kinds of infrastructure accentuate economic development. I am privy to a study carried out on Lagos – Abuja express road, which demonstrates that this project can be executed on a PPP model with many societal benefits. Interestingly, one is involved on two major infrastructure projects finance syndication, which when completed will fuel economic growth. I am sure there are many more across the country.
Nigerian government has been borrowing from external sources to finance infrastructure projects. What really is the problem here?
Infrastructure is an asset, borrowing to finance infrastructure is good. But my limited experience in Nigeria reveals the following weaknesses;
a) That the so called borrowed funds are not properly utilised
b) The fund is spread into many projects, we hardly complete any one, as such they become complete waste
c) There are no thorough design, development, execution of projects from inception to commissioning and functioning. It was reported that the last government of Edo State borrowed $250m to finance infrastructure projects. Is there any project in Edo State tied to this project? And this is a widespread situation across the country.
So, what is the way out?
My humble submission is, take one project at a time, complete it and let it be functional. Some people will say corruption is a problem. Yes, this may be true but there is corruption everywhere. Even in the midst of corruption, we can still achieve something if we use experts to execute projects, not portfolio contractors.
Why are infrastructure projects so expensive to execute in Nigeria that government borrows to finance with huge debt-servicing rate?
Infrastructure is not cheap anywhere. The real problem here is abandonment of project mid-way, abandoned project is the most expensive project.
Nigeria has been borrowing from China lately. It seems China has virtually become our main development partner. What are the economic implications?
I did a comparative research of African nations borrowing from China to finance infrastructure projects. What the research reveals is that these projects are not following the well laid down infrastructure development plans. For instance, China does the design, develop the plans, maybe conduct feasibility study and market research, provide the funds, equipment, men and other resources, sometimes also evaluate the projects, manage them, if they are ever completed.
You do not need a crystal ball to foretell the future; it’s self evident – default. Who benefits on the unlikely event of default – China. That report concluded by saying; Africa is either by commission or omission marching towards second phase of colonisation. The way out, is to separate projects into different entities; infused local contents into the overall project scope and management.
Nigeria currently borrowed more than we took from London and Paris Clubs under one administration than all previous administrations that amounted to $36 billion before that debt was discharged in 2005. What is the justification for this astronomical rise in external borrowing?
Since one has not addressed this issue in details, it will be difficult to give any reasonable response. One would have to evaluate reports from the Central Bank of Nigeria, CBN, National Bureau of Statistics, NBS and World Bank. Otherwise, it becomes a beer parlour discussion. Every serious expert must advise himself against this alluring temptation to comment without adequate information. However, borrowing to finance economic or revenue assets is good but borrowing for consumption as a general rule should be avoided. .