Leadership (Abuja)
Justus Nduwugwe
10 August 2008
Abuja — The Renaissance Group, a global finance services group with wide experience in public private partnership operations, has predicted that Nigeria 's annual gross domestic product (GDP) would hit $216.4billion in 2008, from the level of $166billion as at 2007.
It noted that the Nigerian economy has grown at an average real GDP rate of 6.8 per cent over the past five years (in dollar terms) taking it from $58billion to $166billion as at 2007. Such growth rates are, according to the company, remarkably at odds with the slow progress of infrastructure development across the country, particularly in Lagos State .
In its report on Nigerian infrastructure released last Thursday at the 2-day infrastructure summit held in Abuja , the Renaissance Group, estimated that Nigeria will need to spend over 20 per cent of her GDP on infrastructure to meet its ambition of becoming a top-20 global economy by 2020.
The company, in the report, also observed that Nigerian infrastructure is crumbling, with nearly all services suffering from prolonged periods of serious neglect. Despite Nigeria 's substantial oil potential, it said, its focus over the years has been on rather uninspiring investment in new facilities and assets rather than on periodic and routine maintenance of basic infrastructure.
"The trend of rapid urbanisation is compounding the situation. In 1970, 20 per cent of Nigeria 's population lived in urban areas. By 2010, 70 per cent of the population will be urbanised. With population growth, this means that demands on urban infrastructure will have increased from the requirement to accommodate around 30million to catering for 70million people. Hence, in our view, infrastructure planning and development is the most critical and addressable issue in Nigeria ", it argued.
On how Nigeria got to this state, it said, "Historically, unbalanced political regimes have been the main cause of the dire state of Nigeria 's infrastructure. Unpredictable and abrupt changes of government factions have hindered the planning, accountability and transparency of infrastructure projects. The misappropriation of government revenues have been further undermined by the triple-tier foundations of localised, state and federal governments, and further complicated by the uneven allocation of revenue streams across the territory of Nigeria ".
The report further said that Nigeria is Africa 's dominant oil producer, yet most of this oil is exported to the West, leaving much of the country with shortages. It estimates that Nigeria loses $15billion of oil revenue per year and current production is estimated to have dwindled to as low as 1.5-1.6 bpd – well below Nigeria 's 2.3bpd OPEC quota.
"Nigeria 's banking sector is essentially undercapitalised, in our view, and still operates largely at odds with the long-term requirements of infrastructure financing. Nigeria flares more gas than any other country in the world, burning approximately $2.5bn annually, according to the World Bank", it also stated.
It however notes that despite these deeply problematic foundations, the Federal Government of Nigeria is slowly waking up to at least some of the solutions. It believes that the government has now grasped the need for action rather than the appropriation of blame on prior administration. Ambitious plans, it noted, have been drawn up to bring Nigeria into the top-20 economies by 2020.
The bottom line, it continued, is that Nigeria 's infrastructure challenge is substantial and extremely diverse, but carries substantial opportunity. It posits that PPPs and build-operate-transfer (BOT) will become the key project financing forms which will be used to bridge Nigeria 's infrastructure finacing gap.
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