Making infrastructure procurement more efficient for Nigeria (Part 2)

The Nigerian economy has never collapsed for lack of infrastructure, it has always entered a recession due to the collapse in oil prices. Therefore, to apply Keynesian reflationary policies is simply to apply the wrong prescription. I believe the jury has ruled on this issue, but Nigerians have yet to read the verdict. Earlier, I agreed that PDP had a bad track record when it came to acquiring infrastructure, to the point of almost being overlooked. Yet the economy has grown between 6% and 8% year-on-year for almost 16 years. On the other hand, infrastructure has been APC’s swan song, but in seven years, not once has economic growth exceeded population growth.

Make infrastructure spending work

There are certain conditions under which infrastructure can trigger multiplier effects and then work for Nigerians.

1) Good policies should bring the economy down to about 7% annual growth. Guided use of infrastructure can then propel the economy towards double-digit growth. The reverse of trying to use infrastructure to grow a near-coma economy at a slower rate than population growth is also true, it could just collapse that economy. The managers of the economy must ask themselves the reason for the weak response of the economy to the various intervention plans of the last six years? When Nigerian economic growth cannot exceed population growth for years, we must recognize that there is something wrong; could it be that our population is shrinking?

(2) Change the mentality of governments being the sole supplier of infrastructure and make the private sector a major supplier. At the current rate, the government is providing barely 10% of Nigeria’s infrastructure needs. What happened in the telecommunications sector should serve as a model for other sectors.

(3) A corollary of meeting our infrastructure needs is the improvement in the country’s non-oil cash flow. This is important because the infrastructure alone does not bring in dollars, although a lot of dollars are spent on its acquisition. To repay the foreign loans contracted, the buyer, whether public or private, must turn to the foreign exchange market. This can contribute to the balance of payments problems in the Nigerian foreign exchange market. With the volatility of oil, only non-oil can provide better durability.

(4) As we have reached sufficiency of cement production and probably our building aggregate requirement, we need to achieve sufficiency of iron steel rods. We urgently need the world’s largest steel plant. We have the largest single train oil refinery, so it can be done for steel. With these in place, the quantum of various infrastructure in Nigeria will increase exponentially. (More details in the book, Nigeria Attaining Trillion Dollar Status). It is the production of steel rods for infrastructure in Nigeria that will contribute to economic growth. It is the increased production of aggregates, cement and other materials used in infrastructure that will help boost the nation’s economic growth, not the infrastructure itself. Infrastructure should be seen as the conduit for what is produced by the economy, as it facilitates the movement of produced goods and raw materials for production, among others.

(5) How many Nigerian professionals and semi-professionals directly benefit from mega-construction? The chairman of the Nigeria Engineering Regulatory Council said that 80% of craftsmen on construction sites are foreigners from neighboring countries. All mega-sites have Indian or Chinese colonies housing staff from those countries. Which pockets are really inflated directly by our infrastructure acquisition? As the President of COREN said, Nigeria’s skills gap is growing year by year as older Nigerian professionals and semi-professionals retire and are not replaced by Nigerians. Something drastic must be done to urgently combat and reverse this trend!

This is where Peter Obi highlights the development of human capital. However, this cannot continue as usual with our institutions producing chair engineers, occupying air-conditioned offices for most of their working lives. It’s not just about providing more resources for education; we need to address the content, essence and products of this education. Are we producing “cisterns of knowledge” – a term used by education professor Professor Joel Babalola in his inaugural address to describe Nigerian graduates? Nigerian human resources must become better actors, thinkers, solution providers, innovators, people capable of building like the French engineer Gustave Eiffel, who gave his name to the tower.

Interestingly, the answer to the chicken or the egg question played out for us in our backyard. Let us look no further than the events in Osun State where a former governor, now promoted to federal minister, embarked on an infrastructure blitz and in just a few short years the state found itself in a desperate situation, unable to perform the basic functions of governance. We must keep in mind that governments, through their actions and policies, stimulate or hinder economic development. A bad infrastructure acquisition can lead to a stuck economy, so let’s think it over and ask again. Is the way we acquire infrastructure working for us or for others, including our politicians?

  • Dr Olugbenga Jaiyesimi writes from Sagamu. He can be reached on 08123709109

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