23 August 2007

Nigeria: Infrastructural Decay in Nigeria


Lagos — The economic growth of a nation is no doubt dependent on the availability of functional infrastructures such as energy, roads, railways, water supply, education and a host of other amenities that converge to provide the required environment for the free flow of goods and services across the length and breath of the country.

Since the inception of the previous administration in 1999 a lot has been said about the need to regenerate the economy and reposition the country in the fast emerging new order of globalization. This, the government set out to achieve by setting up a host of agencies charged with the responsibility of creating and funding small and medium scale enterprises as the bedrock of the new economic regeneration as well as the privatization of public enterprises for effectiveness and productivity. The idea behind this policy thrust of the government is quite commendable and worth supporting, but the intriguing thing is the fact that in the actualization of this laudable initiative, the cart seem to have been placed before the horse. For all we know, this is a misnomer and will only result in the birth of a malformed child whose future is destined for doom before delivery.

With the inauguration of this present government which has promised to continue with the reform agenda, a critical look must be taken on the direction of the reform since its inception. In clear terms, for the reform agenda of the government to yield the anticipated result, the present infrastructures in their decay states must be resuscitated as a matter of priority and urgency. The cardinal place of infrastructure in an economy was underscored in the United States of America by the introduction of the National Infrastructure Improvement Act of 2006 in March of that same year in the Senate to focus on the deteriorating conditions of drinking water systems, roads, bridges and other public works in the US. The US National Infrastructure Improvement Act defines infrastructure as nonmilitary facilities including water supply and distribution system, wastewater collection and treatment facilities, surface transportation facilities, mass-transit facilities, airports and airway facilities, resource recovery facilities, waterways, levees and related flood-control facilities, docks or ports, school buildings and solid-waste disposal facilities. This act established the National Commission on the Infrastructure of the United States, charged with ensuring that the nation's infrastructure meets current and future demands and facilitates economic growth.

A major reason why developed and industrialized countries are more productive is the fact that Infrastructure performance was generally much better in advanced industrial countries. In developing and transition economies a main cause of deteriorating infrastructure performance was underinvestment, which was largely due to the failure of governments to prescribe cost-reflective tariffs, especially during periods of high inflation. Under state ownership, prices to levels that could not cover the investment needed to meet growing demand. This problem was deferred as long as governments were able to provide subsidies and international financial institutions were willing to bail them out. But years of under funding and failure to address systemic problems and corruption in the case of Nigeria in particular led to a significant infrastructure deficit in the developing world, generating substantial welfare losses. Infrastructure inefficiencies constrained domestic growth, impaired international competitiveness, and discouraged foreign investment (World Bank, 2004).

A look at our roads from north to west, from east to the south will reveal that if an urgent attention is not given to this all important aspect of this economic rejuvenation, not so much can be achieved. Infrastructure development must be accorded a high priority in the country by this new government to be able to get close to its 2020 target. A trip through the East-West road will tell the most deplorable state of our roads all over the country. A journey of only three hours from Lagos to Benin City now takes a whole day and sometimes two, with instances of trailers, lorries and containers falling and completely blocking off the roads from traffic movement, leaving Drivers, commuters, goods and services stranded for hours unending with some drivers navigating their ways through some undefined bush parts not without opportunistic local youths mounting toll gates leaving these commuters with no choice than to part with money to be able to move on. This definitely will discourage any domestic or foreign investor who is aware that the movement of his finished goods and services are not guaranteed. A well laid out road network that is motor able all season is sine qua non across the country to link the rural areas to the urban areas, connecting all the hinter lands to provide impetus for developments such as factories, hotels, schools hospitals etc in places away from the city hubs, thereby reducing urban migration and its attendant crime wave and other vices. For instance, a trip from Antwerp in Belgium to Mons, an industrial town bordering France and Belgium, with a distance of about 530 kilometers only takes about less than two hours by train; this definitely encourages industrialists and entrepreneurs to operate from such remote areas knowing that their goods and services will get to their intended destinations without any delays. In the same vain, Telford or the black country, an industrial town in the Midlands in the United Kingdom, where the industrial revolution started with the first iron by Thomas Telford, as well as the first iron bridge ever, is home to many industries that operate and are sure of the distribution of their goods to other parts of the UK and Europe through an integrated rail and road network that guaranty's effective transportation of their goods and products. Mr. Goodie Ibru in his book Nigeria, The Promise Of Tourism, clearly captures the unfortunate position Nigeria finds herself when he said, "The movement of masses of people and goods is key to urbanization. The pressure to achieve this led to the production of mass transit modes of transportation in the 20th century. The railway was the axle of this development. The countries with large territories became railway giants.

In the same vain, the dismal output of the nation's power generation can account for the low influx of FDIs and the growth of local businesses in Nigeria compared to some other African countries like South Africa and Egypt. For example, Nigeria's available power generation capacity with a population of 140 million people stands at 4.5GW, South Africa with a population of 40 million generates a capacity of 36.0GW while Egypt with a population of 79 million generates 23GW. According to a statistics provided by Engr. J.O. Makoju, the Special Adviser to the president on Electric Power at the NESG conference on infrastructure in Nigeria, recently, shows a low level of investment in the power sector when compared to the two other African countries. Since 1999 to date, the Federal Government of Nigeria has spent USD 6.3 billion in the power sector for the generation, transmission and distribution of power projects, South Africa on he other hand is making plans to invest USD 22 billion in new G-T-D power projects over the next 5 years in addition to its existing capacity while the sum of USD 57 billion is to be spent on G-T-D power projects in the next 6 years by countries in the middle east and North Africa with Saudi Arabia alone planning to spend USD 17 billion. Breaking it further, South Africa has a ratio of 800 watts of electricity per person while Nigeria is at the abysmal level of 30 watts of electricity per person. To achieve an equivalent of 800 watts per person, Nigeria would need to generate 104,000MW of electricity, a far cry from the situation there is today. It is important to point out that out of the said USD 6.3 billion expended since 1999, it will be right to say that over half that amount would have been lost in transit through corrupt practices. It is a lesson in shame to mention that on a per capita basis, Senegal, Zambia, Ghana, Kenya and several other less endowed nations, all generate more electricity than Nigeria (IEA 2001).

Ikediashi, wrote from the UK

It is in line with this need that the Nigerian Economic Summit Group recently had a conference on infrastructure in Nigeria, at the Transcorp Hilton, Abuja, to articulate the problems of infrastructure in the country and to suggest ways forward based on the latest global trend of public-private partnership in the development and maintenance of infrastructures in Nigeria. The government is desirous of encouraging employment and exports and, more importantly, it wants to attract FDI that will enhance the current levels of technology acquisition and lead to continuous increases in technological sophistication in the future. On the other hand, Multinational firms seek to find the best locations for each type of activity depending on costs, reliability, and similar factors. Equally, SMEs and other local firms want to gain a share of the action as contractors for MNCs and ultimately, perhaps, to become independent competitors, however, to achieve this, the ability of Nigerian firms - and most especially SMEs - to gain advantageous positions in international supply chains depends on the competitiveness of the country's infrastructure in comparison to the infrastructures of other developing nations. If a nation is to advance technologically in relative terms, it needs to provide MNCs with easy access to regular and uninterrupted power supply, good network of roads and railways, a skilled and educated labour force that can then receive cheap and rapid on-the-job training to become productive workers and other infrastructural requirements (Ebsco, 2007).

Government, however, must not operate unilaterally. Instead they should act as facilitators with active co-operation from SMEs that are willing to make an effort to learn and to learn to learn. The goal of governments should not be to control economic development, but to provide incentives for private sector activities that lead eventually to self-sustained technological uptake and growth. To achieve development, the government of Nigeria need to join with MNCs and with local SMEs to determine the types of infrastructure and training that are needed while allowing ample scope for entrepreneurial direction in other areas on the part of the private sector. Where this cooperation is attractive in Nigeria, the situation is a bit daunting in that the country requires substantial new infrastructure investment largely because the networks where they exist are underdeveloped and equally have not been adequately maintained or modernized. For example, in all areas of infrastructure in Nigeria, there is a huge supply-demand gap that must be bridged if the nation can make its desired progress to achieving the MDGs or becoming one of the 20 great economies of the world by 2020. Essentially, Efficiency is especially important in infrastructure because such services are critical for manufacturing, transportation, and commerce - and so essential to boosting economic activities.

The role of institutions cannot be overlooked. Most developing and transition economies have suffered from much worse infrastructure performance than have advanced industrial economies. But the structure of ownership has not been the key explanatory variable for the differences in performance. After all, for many years, state ownership prevailed in most advanced economies. The true explanation lies in the broader institutional context. Strong institutions took a long time to develop even in advanced industrial economies. It is difficult to create such institutions overnight in societies like Nigeria that do not have the constitutional , political, and legal traditions required to support them. Thus achieving the public interest objectives of privatization will take longer than has elapsed since such reforms were introduced in most developing and transition economies like Nigeria. In this light, the present government should review the privatization exercise so far to ensure that it has not derailed as well as establishing the right framework to guide the exercise and ensure it does not create mere oligopolies that do not have the right foundations and which will eventually take the nation back to positions worse than where we started from. The essential point is that all the necessary regulatory issues must be evaluated and implemented properly to create a solid foundation to ensure a sustainable privatization and public-private partnership initiative in Nigeria in spite of the time it will take, after all, in East Asia's 'miracle' economies it took several decades of concerted efforts to produce notable results (World Bank, 2004).

To further put infrastructure in Nigeria in proper perspective, this article will be further broken down into six sub-sections which include; power infrastructure, education which encompasses skilled man power and research and development, telecommunication and other physical or hard infrastructures like roads, rails and industrial/science parks that are considered prerequisites in the quest to industrialize Nigeria and make it a hub for economic rejuvenation of the entire continent of Africa and most probably become the fifth introduction to the 'BRIC' countries of the world.

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