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Monday, April 15, 2024

Revamping infrastructure as catalyst for economic growth 

The Federal Government, in recent months, has made significant investments in infrastructure development, recognising its importance in unlocking the country’s vast potential, and reviving the economy, writes JOSEPH INOKOTONG.

Infrastructure development plays a pivotal role in enabling economic growth, fostering social progress, and driving sustainable development, not just in Nigeria, but the world over. It provides the essential physical foundation for businesses to operate, goods to be transported, and people to connect.

In recent months, the Federal Government has made significant strides in investing in infrastructure development, recognising its importance in unlocking the country’s vast potential, and reviving the economy.

The 700 kilometers Lagos-Calabar coastal road, which the Minister of Works, Dave Umahi, said will be constructed at the cost of N15 trillion will have positive impact on businesses when completed. Other infrastructural projects are ongoing in the country to reverse the huge deficits being experienced.

The prevalence of infrastructure can play a major role in the fight against inflation, which Nigeria is struggling to overcome because when a country has well-developed infrastructure, it becomes more efficient, productive, and competitive.

Experts enumerate ways that infrastructure can help drive down inflation to include cost reduction. They explained that when transportation, communication, and energy systems are well developed, it reduces the costs of doing business. This leads to lower prices and helps control inflation. Increased Productivity: Good infrastructure improves efficiency and productivity. This leads to higher Gross Domestic Product (GDP), and in turn, a lower inflation rate. Increased Investment: Adequate infrastructure encourages investment. This means more money is circulating in the economy, which can reduce inflation.

Better Distribution: When infrastructure is well-developed, goods and services can be distributed more evenly. This reduces the demand-pull inflation effect, which is caused by an imbalance between supply and demand. Improved Trade: Infrastructure facilitates trade by improving access to domestic and global markets. This can lead to more exports and foreign exchange inflows, which helps stabilize the value of currency and reduce inflation.

British conservative party politician, Alok Sharma once explained that infrastructure will always become the backbone of economic growth, as it improves access to basic services such as clean water and electricity, creates jobs and boosts business.

The United Nations, in fact, also, confirms that both economic growth and social development depend heavily on nations’ ability to invest in infrastructure. This is why its sustainable development goals nine – provides for  building of resilient infrastructure, promotion of sustainable Industrialisation and fostering innovation.

However, Nigeria, like many African countries, continues to face near total lack or poor infrastructure, mainly, due to bad attention by successive governments. Many have wondered if previous Nigerian leaders do understand the potentials of infrastructure as a catalyst to facilitate and accelerate economic development. Experts agree that painfully, the lack of infrastructure in developing countries is one of the primary reasons for poverty.

The administration of President Bola Tinubu announced an ambitious plan to reverse the country’s comatose position of years of decayed and total absence of critical infrastructure in virtually several sectors of the economy. This is coming amid the Global Competitive Index Report 2019 which ranked Nigeria 130th out of 141 economies surveyed for quality infrastructure.

Chairman of the Federal Inland Revenue Service (FIRS), who doubles as Special Adviser to the President on revenue, Dr. Zacch Adedeji told reporters in Abuja recently that President Tinubu had approved the establishment of an infrastructure development fund – christened, ‘Renewed Hope Infrastructure Development Fund,’ (RHIDF).

The new vision of the government comes with the belief that where there are no infrastructures, economic development and growth would be difficult to achieve.

According to the FIRS boss, an analysis of the integrated infrastructure master plan commissioned in 2020, shows that Nigeria needs at least, $895 billion annually in the next 10 years to address its infrastructure deficit. The renewed hope infrastructure development fund he said, therefore, aims at putting a holistic approach to how the country can sustainably mobilise resources to fund and boost economic development.

For the World Bank’s Country Director to Nigeria, Shubham Chaudhuri, it would indeed, take the country 300 years to bridge the gap in infrastructure deficit, at the current rate of funding. This becomes worrisome.

“What we have observed is that we need national infrastructure backbone. To do that, it requires that we think outside the box and compare what has worked elsewhere, whether within our country or in other advanced countries that we are truly proud to be associated with,” Adedeji said at a news conference.

The concern about Nigeria, especially from the international community is that, 63 years after independence, development continues to remain stunted. In fact, some see the country as a graveyard of abandoned projects. The public refineries for instance, have failed decades ago, the rail, road, airport and seaport infrastructure remain grossly inadequate, while power supply is miserably low. Some public commentators note that despite this poor state, the national and sub-national governments recklessly allocate more resources to recurrent over capital expenditure.

President Tinubu›s handlers are optimistic that the present government’s deliberate actions of policies are capable of reversing tbe urgly situation, and improve millions of lives.

Although there seems to have been previous attempts to upscaling the country’s infrastructure, like the reviewed national integrated infrastructure masterplan – 2020, the political will for implementation was completely absent.

The desire of the Tinubu administration is to consolidate existing resources to drive economic growth and connectivity across sectors like transport, agriculture, aviation, and education and other sectors for inclusive progress, leaving no community behind.

Interestingly, the National Assembly seems to have also woken up regarding concerns for the nation’s decaying infrastructure. Members of the parliament recently, urged President Tinubu to declare a state of emergency on the nation’s infrastructure problem.

Chairmen of the Senate and House of Representatives Committees on Works, Senators Barinada Mpigi and Honourable Akin Alabi respectively, believe that the state of emergency declaration becomes imperative, given the enormity of the challenges on ground.

In their view, the situation calls for thinking outside the box, because, the financial requirements needed to fix the nation’s infrastructure are well beyond the capacity of annual appropriations.

What the Tinubu government has decided to do, according to the FIRS Chairman, Adedeji, is therefore, to expand the initial presidential infrastructure development fund, unifying efforts, streamlining projects delivery for maximum impact.

Adedeji explained also that in doing so, the new focus would help accelerate infrastructure development, sparking economic dynamism nationwide.

The expectation is that there will be, going forward, massive investments in nationally critical projects in sectors that will promote growth and enhance local value addition. In doing so, there is hope too for backward, forward and parallel linkages, that will create employment opportunities, promote technological innovation and exports.

According to Adedeji, potential sectors, which the present administration intends to focus on, include, agriculture, energy technology, healthcare and education among others.

A senior presidential aide who does not want his name in print, explained recently that the goal of the government is to actually establish an innovative infrastructure investment vehicle that will be used to attract and consolidate capital, serving as a driver for economic advancement.

The aide noted that going forward, Nigerians will witness the strategic execution of meticulously chosen national infrastructure projects across several key sectors, like coastal roads, rail systems especially, the south and eastern corridors, projects in agriculture spanning from irrigation, storage, logistics and food security, as well as ports and airports infrastructure.

Arrangements appear to be on top gear by the government for President Tunubu to launch the RHIDF any time soon, an intervention believed to be a major vehicle that would result in a thinking-outside-the-box solution for Nigeria’s huge infrastructural gap.

The Coordinating Minister for the economy and Minister of Finance, Mr. Wale Edun and the Minister of Budget and National Planning, Atiku Bagudu are already working out a supplementary budget for the 2024 fiscal year that would take into consideration, the proposals enunciated in the RHIDF. It is expected to be domiciled in the presidency for proper coordination, monitoring, and implementation.

For experts, if the country must make a difference this time, the government needs to strengthen its project planning, regardless of the fact that oftentimes, robust and diligent project planning is usually perceived by project sponsors to be an expensive undertaking.

There is need for also stronger technical partnerships and commitment to knowledge transfer, as well as the mobilisation of the “right” equity for infrastructure projects, in the case of private sector participation. A few also believe that innovative funding arrangements could surfice, if the boisterous dream must be achieved.

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BFIA Admin
BFIA Admin
The big boss.

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