ALP business Review 2016/17

Infrastructure or Bust: Nowhere Left to Hide

By John Delano LLB (Hons)

Akindelano Legal Practitioners

In 2013, the Africa Development Bank (AfDB) estimated that Nigeria’s GDP could have grown by an additional two percentage points (as against the 5.4% which was actually recorded) if we had had greater infrastructure stock. It is a statement made at the height of the economic boom when Oil prices were over $100 (USD) per barrel. The Nigeria of today is in an entirely different place – it cannot afford not to develop its infrastructure – but now it must do so under the most excruciating stress and strain, in an economy where Oil prices are less than $50 per barrel and investor confidence is, at best, lukewarm.
The real trouble with Nigeria is that at the end of every growth cycle, the Nigerian economy comes back to Square One – the realization that its infrastructure needs a serious upgrade. It is clear from the articles within (the ALP Business Review) that, like it or not, we must now stop playing lip service to infrastructural development or diversity as a critical need because there is nowhere left to hide. We will not re-emerge from this economic malaise based on the resurgence of Oil prices.
It is also clear that Buhari’s government must now empower the private sector and create an environment where the working populace can make progress by dint of their own industry and enterprise.
Nigeria is not dead – But Nigeria is yet to be resuscitated because too many times the Managers of our economy have ignored basic principles – maintaining a substantial foreign currency reserves; actively diversifying the economy and spending on Investing in Infrastructure rather than consumption.
Despite the many challenges, this is not a time for pessimism. Nigeria’s government agencies charged with promoting foreign direct investment (Federal Ministry of Trade and Investment and the NIPC) must galvanise all their resources to accentuate the positives about investing in Nigeria.
The government must also have a rethink of its policies, especially with regard to enabling bona fide companies to transfer funds in and out of Nigeria at a fair rate of exchange.
No major sector of the economy can emerge or thrive without basic infrastructural support. There has been a constant clamour for a return to an agriculture-based economy, and it is a reasonable position to take. But under close analysis, we find that more than half of the produce from agriculture is lost as a result of poor transport links and non- existent storage facilities. Without the establishment of an integrated system of storage as well as road and rail systems in the hinterlands of Nigeria to load up and bring commodities to markets within the country and to ports for export, we will continue to lament the under-utilization of Agriculture as a source of foreign exchange and as a provider of employment.
The same is true of Mining and, indeed, any industry sector that requires a good transportation network and efficient Ports. Be that as it may, the chronic state of the -Power industry remains the biggest Elephant in the room.
Vision 20:2020 was a good plan, but it is almost certainly fail. We will not have an installed capacity of 40,000MW by 2020 because it takes on average five years to build a Power plant and (in our jurisdiction) at least three years to negotiate all the Contracts and reach financial close. Azura is testament to this. We need to revise the plan, but we need to do so in line with the development of other projects that will drive economic activity and provide the kind of multiplier effect that will make the Nigerian economy the colossal success that it has the potential to be.