Guardian

MIDYEAR in 2007, the analysis  available from usually  redoubtable sources disposed that Nigeria would need to produce a Gross Domestic Product  in the range of US$570 billion  by year 2020 to qualify as one of the 20 largest economies of the World. It translated the country attaining a growth rate of 12.5% annually for about fifteen years to 2020. Only China is known to be performing at that stratospheric level.  Nigeria was no China and the attributes of Chinese leadership was exhausting for our counterparts to assimilate.

From the midterm of the Obasanjo Presidency substantial reforms were being imposed on the Nigerian economy-Privatisation and Commercialisation of Public Enterprises, Public Procurement, Deregulation of Pump price, a Federal Budget Office- culminating in the second term with the landmark Paris Club debt negotiations, a debt cancellation of 40% on the US$30billion principal.

The import of the Paris Debt cancellation was lost on several components of our polity-policy makers, the Nigerian elite and the political class. It had no immediate meaning beyond the chest thumping and the scramble for accolades. A number of persons theorised, the media editorialised that this momentum should be maintained and that the particular avowal by Nigeria that it will spend the savings in specified social sectors towards attaining the Millennium Development Goals be adhered to.

The  then sitting Vice President, accompanied by aides in his conference room, was taking in a presentation on the State of Infrastructure deficit in Nigeria with scenarios on the screen for Public- Private Sector Cooperation and Financing prospects from several regions of the World. Burrowed into the details, the VP stops further running of the slides and directed that certain Ministers and Portfolio Chief resume in his Conference room tomorrow; that the presentation will begin afresh the next day.

It held. Ministers of Finance, National Planning, Water Resources, and Transport were there. Managing Director of NNPC and a number of senior policy Advisors took notes and asked many questions about ‘where has this scheme been used before’   Response: precedents abound; replicate or invent your own solution and dig up the will to see it through; ‘Do we really have the expertise for this’ Response: Yes, we do, yes we can otherwise, we hire and import skills.

The thrust of the presentation and conversation was the need to rethink the strategic choices available to Nigeria against the backdrop of the Paris Club Deal which enhanced the Country Credit Rating. In the aftermath of such game changing result, a key initiative included to systematize the public infrastructure sector towards enabling   private sector investment; sensitize the world to the opportunities and high incentives available to these partnerships in developing Nigeria Infrastructure.

Indeed, the proposition was to create a new product in the international financial markets to facilitate a Nigeria Infrastructure Fund as additional but, dedicated funding window for the Nigeria investment destination. Sufficient conditions further augmenting the argument include burgeoning crude oil prices (a high in 2007), improved Foreign reserves and the surfeit of Long tenor finance from both Infrastructure and Sovereign funds in the Middle East and Asia.

Nigeria’s ever present political choir at this time singing the litany of an inchoate 7?point Agenda that was evidently, and unfortunately, backed up by an unscripted (and perhaps unintended) growth rate of 7% and counting. Over shadowing all the political grandstanding and undermining the sustainability growth path in Nigeria was dilapidated infrastructure.

Joseph Stiglitz remarked in his very interesting The Roaring Nineties that much of what happens to an economy does not depend on Government but Governments expect the economy to be favourable to it. He must have forgotten to insert an exception. In 2007 Nigeria, Government was in a most idyllic position to affect the economy but it baulked.

The Government effect on the Nigerian economy is enormous and, in instances, horrendous. Only Government as Executive and Legislature, can drive   Power Supply, Modern and safe Highways, Bridges, Rail, Water Supply, Dams, Inland Waterways, Pipelines, Refineries, Sea and Airports. Those are the cumulative total of an economy.

In the embarrassing and an acute absence of widespread infrastructural support already threatens the current efforts and endangers the socio?economic fabric for the future. There is a massive need to re?order and engage this constraint in a most cost efficient model.

With the ascendancy of the then VP to the Presidency, all the risks that were sterile or dormant in our 2007 presentation have all germinated and materialized! The market had moved!

Firstly, the Funds have evaporated when their Europe and America portfolio was eviscerated by the financial crisis of 2008-10.Secondly, Nigeria’s country risk defined by everything and all things said or done by our Governments and compatriots has quadrupled; thirdly, each subsequent administration fights shy of taking a stand on a specific portion of the Infrastructure sector.

Observe, for instance that in spite of the billions  of US Dollar already spent , there are  still tentative approaches to the Power Sector Generation, Transmission Management, Gas Pipeline Project, Coal Mines Exploration, Privatization of PHCN . The levity that appears to be attached to contracts, freely entered into by Government has been very unhelpful.

For the medium term Nigeria posted an average GDP growth of about 7% and still growing. The quest to redress the substantial negative growth of the real sector  while urgently addressing  the unemployment debacle  calls for even far more decisive economic reforms immediately. A most critical success factor is the renewal of physical infrastructure across the length and breadth of Nigeria.

Currently, we have applied our scarce capital to rebuild or construct airport terminals. That is an example of a paradigm in the Public sector implementation where availability of cash appears as the beginning and end of policy options. These airports represent one sector lot that meet the parameters for private sector concessioning- physical address, traffic viability per airport, International Standards and Regulations. The policy choice to utilise only Nigeria’s equity funds on the project is not optimal because even in the strictures of foreign direct investment today , imaginative margins ranging from 10% to 40% contribution from  Nigeria private sector or Public funds  would have attracted several good track operators to build and operate the airports on win-win  terms.

Our seaports and Maritime terminals have witnessed concessions of a very rudimentary nature. A clear test is that the new operators have bulging cash flows to detriment of their environment. Our Public-Private engagement at the ports does not meet higher national aspirations and ought to be driven more robustly. New ports development such as gave birth to Tin Can Island are not in the pipeline and yet we feel the congestion at Nigerian ports and excite users of other West African ports.

Domestic Managers transparency in the matter of the Lagos –Ibadan Expressway may be more difficult in discerning than the assembling of credible operators to meet the challenge of this critical highway. Roads as infrastructure need not disturb the budget process as it amenable to all the technical prerequisites for amortisation over decades. Enugu- Onitsha, Port Harcourt-Enugu-Makurdi and several other key roads are underfunded for the wrong reasons.

Added to the prospect of technology and funding is the fact that the dread of political backlash from road toll could be   offset by Public subsidy, the type of which is currently misdirected to unintended beneficiaries.

As we mull over another Democracy day, it is pertinent to posit that capital expenditure is the grounding of democracy: Establishment and Improvement of public goods as distinct from the calamity of hyper recurrent expenditures. That the balance of funds be harnessed for partnerships and cooperation

Minimum infrastructure development finance still exists for Nigeria but it calls for more creativity than photo opportunity. In the equation where Nigeria holds out US$2billion as her own equity annually, there is mileage to go. For a start, there is the pension funds contribution of millions of individuals to solicit as partner.  Within the sanctity of their contracts, without accentuating the risks, the law may find a role for that portfolio in the redress we badly require in the infrastructure sector.

Infrastructure deficit in a land where the population advantage has re-emerged and the energy of the people literally covers the vast land mass is an adversity waiting to deteriorate. It is a metaphor for serious dislocation.

China managed her future with an unparalleled export strategy yielding superlative indices for verifiable growth.

Nigeria has the opportunity yet to rise to the challenge with a higher notch of aggression and talent. As Nouriel Roubini, while applauding Keynes has suggested since the 2008 crisis, that there are new orthodoxies for public spending and asking for more, which our Economy Managers ought to look at. On the evidence of it, the launch of employment initiatives inside the luxury of the Transcorp Hilton are not going fast or turning profound enough.

An emergent Nigeria will be driven more readily by economic infrastructure resourcefully packaged followed closely by efforts of the Financial Sector reforms. Whereas the future of the finance sector is tied to infrastructure development, its participation is stemmed by the skewed nature of deposit liabilities in the system, short term in excess of 80%, serious long tenor (exceeding ten years) and big ticket items are prohibitive combinations.

The possibilities exist and can be worked upon as we suggested in 2007. Six years on, we   return to those  concluding slides of our presentation to His Excellency to count the Projects viable in a PPP consummated with the highest political will and world best practices-Roads, Energy, Dams, Refineries, and Rail tracks. Those are investible Democracy Dividends.

• Tony JK Nnachetta FCS, F.IoD, a Money and Capital Markets Advisor is a Visiting Member of the Guardian Editorial Board