Building World-Class Infrastructure Across Nigeria Through Public-Private Partnerships

Infrastructure development is critical for Nigeria’s economic growth and global competitiveness. However, the country faces a significant infrastructure deficit across sectors like power, transportation, housing, digital connectivity, and water resources. Bridging these gaps requires mobilizing private capital and expertise at scale through public-private partnerships (PPPs). With the right policies and project execution, PPPs can accelerate building world-class infrastructure assets across Nigeria.

The Infrastructure Challenge

Inadequate infrastructure constrains Nigeria’s potential. Key aspects include:

• Power: Frequent blackouts and high cost of generation hamper industries. Only about 55% of Nigerians have access to grid electricity.
• Roads: Nigeria’s 194,000 km road network has barely expanded since 1990. Over 60% of roads are poorly maintained, hampering transport.
• Rail: Nigeria has just 3,500 km of narrow gauge railway lines, limiting cargo and passenger traffic. No trains operate nationwide.
• Ports: Congestion at ports causes delays and raises export/import costs. Enabling multi-cargo handling will enhance efficiency.
• Housing: With a 17 million unit housing deficit, limited affordable options exacerbate social challenges in urban areas.
• Digital infrastructure: Broadband penetration is less than 40%. Digital connectivity is indispensable for modern commercial activity.
• Water: Only 67% of Nigerians have access to clean water due to dilapidated supply infrastructure. This impedes health and productivity.

Upgrading infrastructure is thus an urgent priority for economic development and improving living standards. Nigeria’s Infrastructure Master Plan requires $3 trillion over 30 years. The country cannot fully finance this via traditional public procurement. Private investment and expertise must be leveraged.

The PPP Opportunity

Public-private partnerships allow governments to attract private finance and skills for public infrastructure. Well-structured PPPs enable:

• Innovation: Private sector ingenuity provides technologically advanced solutions.
• Efficiency: Competition introduces cost and project discipline lacking in public delivery.
• Funding: Significant capital can be raised without solely relying on strained public finances.
• Risk transfer: Risks are allocated to the party best able to manage them.
• Economic stimulus: Infrastructure upgrades provide direct growth stimulus and enhance competitiveness.
• Expertise: Private consortiums bring specialized technical and managerial expertise.

Globally, the construction and infrastructure PPP market is worth over $300 billion annually. In Africa, PPPs have delivered notable successes like the Dakar-Diamniadio Toll Highway in Senegal. Adopting PPPs can enable Nigeria to tap global infrastructure development capacity.

Current Use of PPPs in Nigeria

While still at an early stage, Nigeria is increasingly adopting PPP models:

• Roads: PPP highways like the Lekki-Epe Expressway are operational or under construction in Lagos, Abuja, and other cities.
• Rail: The $3.9 billion Abuja-Kaduna railway was delivered via PPP and opened in 2016. Further PPP rail projects are planned.
• Port Infrastructure: Public-private concessions have created new cargo handling terminals in ports like Apapa and Calabar.
• Power: The Azura-Edo IPP brought 459MW of new generation capacity through a PPP structure. Similar projects are in the pipeline.
• Airports: The new international terminals in Lagos and Abuja airports were upgraded by private operators under concession agreements.

However, PPP use remains well below potential, hindered by policy and institutional constraints. Addressing these limitations can unlock greater infrastructure investment.

Key Challenges Constraining PPPs

Despite successes, various barriers have constrained the optimal use of PPPs in Nigeria:

• Enabling policy: The absence of sector-specific PPP policies and laws slows new projects. A comprehensive PPP legal framework is now under development.
• Institutional capacity: Weak governance structures for conceptualizing, procuring and managing PPP projects reduce investor confidence. Federal and State PPP units need considerable strengthening.
• Land acquisition: Difficulty acquiring land for projects causes delays and opposition from local communities. Fairer, transparent processes for land transfer are required.
• Permits & approvals: Multiple layers of bureaucracy make obtaining licenses and permits lengthy. Streamlining and digitizing processes can accelerate approvals.
• Financing: Nigeria’s underdeveloped financing markets and high interest rates discourage investors. Providing risk guarantees and credit enhancements can help.
• Foreign exchange: Private investors bear exchange rate risk as most PPP revenues are in local currency. Hedging instruments must be developed.
• Pipeline development: A robust pipeline of bankable PPP projects has yet to emerge. The government must undertake more rigorous project preparation.

Overcoming these limitations is essential to catalyse greater PPP investment. Purposeful policy reforms and institutional capacity building need to be prioritized.

Critical Policy Reforms and Actions

Realizing the full potential of PPPs requires strategic policy reforms in several key areas:

• Legislation: Enact a comprehensive PPP law establishing a clear framework and procedures for PPP procurement, implementation and contract management compliant with global standards.
• Institutions: Setup specialized PPP Units in all States and Federal MDAs. Build their technical expertise on PPP project cycle management covering feasibility, procurement, and monitoring.
• Fiscal commitments: Make concrete multi-year budgetary commitments to support PPP project capital investment and operational viability through measures like guarantees, subsidy payments, revenue top-ups, and one-time grants.
• Land reforms: Pass legislation streamlining land acquisition for infrastructure projects through transparent processes balancing community concerns and timely project execution.
• Permitting & licensing: Digitize and consolidate the permitting process through online single window clearance systems with defined timelines.
• Dispute Resolution: Establish fast-track infrastructure project dispute resolution mechanisms. Enforce arbitration judgements promptly.
• Procurement process: Introduce e-procurement systems for PPP tenders. Provide templates and transaction advisory to improve procurement effectiveness.
• Financing innovations: Set up dedicated project development funds. Utilize tools like Viability Gap Funding, credit guarantees, and currency hedging to attract investors.
• Monitoring: Install robust frameworks for monitoring PPP project compliance, service standards and termination provisions. Apply sanctions for non-performance.

10 Critical Projects to Transform Nigeria’s Infrastructure

Implementing high-impact PPP projects across priority sectors will usher in a new era of world-class infrastructure nationwide. Some potential game-changing PPP programs include:

1. Lagos-Calabar Coastal Rail Line – Link Lagos to Calabar by high-speed rail to transform cargo and passenger connectivity along Nigeria’s coastline.
2. Mambilla Hydro Electric Plant – Build a 4,000MW power plant in Taraba State to drive industrialization and rural electrification.
3. Anambra River Inland Port – Develop a tri-modal inland port with shipping, rail, and road access to decongest Apapa port.
4. Kano Dry Port – Establish a major dry port terminal linked to railways, serving the northern region.
5. Lekki and Badagry Deep Sea Ports – Develop new deepwater ports in Lagos with world-class capacity and efficiency.
6. Kabba – Abuja Highway – Construct an expressway linking the North Central region to Abuja.
7. Oyo State Ring Road – Build modern urban ring roads easing congestion and intercity connectivity.
8. National Broadband InfraCo – Rollout fibre-optic network providing affordable high-speed broadband services nationwide.
9. Abuja Technology Village – Establish a technology park and innovation cluster attracting foreign IT investment.
10. Lagos Fourth Mainland Bridge – Construct a 38 km bridge to reduce severe congestion between Lagos Island and the mainland.

Properly structured PPP models can mobilize private expertise and financing to undertake these nation-changing infrastructure programs. With visionary leadership, Nigeria can transform its infrastructure landscape in the next decade.

Conclusion

Modernizing infrastructure is indispensable for Nigeria to realize its economic potential. Ambitious PPP adoption offers a viable path for the rapid development of more resilient and advanced infrastructure assets. To reap the full benefits, a supportive policy framework matched by capable institutions must emerge. With pragmatism and partnerships, a brighter future powered by world-class infrastructure across Nigeria is attainable.