19 September 2017

Nigeria: Road Construction - Stakeholders Brainstorm On Economics of Innovative Solutions

Against the background of the need for adequate road infrastructure which is central to Nigeria's economic growth and core of good governance and public welfare, stakeholders in the nation's construction industry, weekend, gathered at the Road Construction Summit 2017, put together by cement giant, Lafarge Africa Plc, in partnership with BusinessDay newspaper to find practical and innovative solutions to construction of roads in the country.

The theme of the one-day summit which held in Lagos was "The Economics of Innovative Solutions to Road Construction in Nigeria".

In his presentation, Minister of Power, Works and Housing, Mr. Babatunde Fashola who was the guest speaker, noted that Lafarge Africa Plc has sent a clear message by its innovative strides arising from research as presented by its engineers at the summit that the company wants to go far in terms of infrastructure development, pointing out that it is time for the federal government to raise its game as regards infrastructure development using innovative solutions such as concrete.

Fashola who disclosed that with respect to construction and related activities, GDP in the sector had been negative since Q2 2015, but turned positive for the first time in Q1 2017, growing by 0.15 per cent and continued to positive growth into Q2 2017 by 0.13 per cent, said the reversal in construction has to do with civil works especially due to federal government's capital expenditure.

He stated "Clearly what has worked well in other parts of the world can work well in Nigeria. Infrastructure expenditure drives the real economy, stimulates production and industrial activities which employ people and includes them. This is the economics of road construction. If proof of this is required, I will share some more data.

Economic recovery

"During the implementation of the 2016 budget we paid 103 construction companies executing 192 projects which employed 17,749 people directly and 52,000 people indirectly. What this means is that the Economic Recovery and Growth Plan is working. This much the president of the Manufacturers Association attested to when he asserted that this was a plan that had their members input.

"So, the growth and exit from recession means that hope has been restored, and if we persevere and persist, the number of people who recovered lost jobs and those who will find new jobs, will gradually increase. The process to continue this has commenced with the provision of funding under the 2017 budget in the sum of N90 billion.

"Of this, N47.169Billion has been paid to 62 contractors working on 149 projects to continue works on roads and bridges and keep people at work and sustain production in works. Similar payments are being made to supervising consultants and to contractors in Housing and Power Sectors of the Ministry. With this background, I now go to the innovative side of road construction and economics, and what this government is doing. We inherited a tax incentive policy for individuals to benefit from tax remission, to recover investment made in public infrastructure like roads, which other members of the public can utilize.

"I am pleased to inform you that we have just concluded an agreement using the tax incentive order to hand over the Apapa area comprising Creek Road, Liverpool Road, Marine Beach to Mile 2, Oshodi, Oworonshoki to the Lagos end of the Toll Gate on the Ibadan Expressway to Dangote Group for construction using concrete.

"As for the agreement with Dangote, we are now awaiting the Design of the 35 km stretch excluding the portion that has been completed, about 7 km, by the previous administration around Mile 2 area. From the design, we will determine the cost and the scope of works which we hope can be executed quickly. As this Government promised, we will solve the Apapa and Port congestion problem.

"I can only tell you that the solution is now on the way. Can any well-meaning and right thinking person argue that these are not innovative; or that they will not help road construction? If you remember, the numbers I have shared earlier about jobs created, and demand for petroleum products and mining products given only by using government funding under the 2016 budget, you will see the possibilities that lie ahead and improving those numbers when private capital comes into road construction under the tax relief order as proposed to be amended to complement government's spending."

Speaking earlier, Chairman, Lafarge Africa Plc, Mr. Mobolaji Balogun pointed out that importance of good and sustainable roads anywhere in the world cannot be over emphasiesed, adding that strong economic growth of any nation depends on sustainable infrastructure.

Balogun who said roads are the core of infrastructure provision in the country, noted that this was what informed the partnership between Lafarge and BusinessDay to organise the summit, adding that the government alone cannot do it.

In his remarks, Managing Director, Lafarge Africa Plc, Mr. Michel Puchercos, said road network in Nigeria is the largest in West Africa, pointing that road infrastructure in Nigeria as it stands today, cannot meet the demand of the people, hence the need to strategise on the sustainable way to meet the demand.

Puchercos said the burden of road construction is too much for the government alone to shoulder, adding that bearing this in mind, informed his company's decision to partners BusinessDay to hold the summit. He said his company is willing to partner the government on infrastructure provision, as the company has capability to handle road projects with its concrete solution to road construction.

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