The poor state of infrastructural facilities remains a major hindrance to domestic production in Nigeria. With the gradual withdrawal of government from direct involvement in business activities, it was to be expected that its role in the development of infrastructure would increase. Unfortunately, this has not been the case; government funding and execution of key infrastructural facilities have been significantly inadequate to support the level of economic activities.
The inability of government to fulfil its role in the provision and maintenance of public infrastructure such as roads, railways, water and the effective monitoring of the power sector which has to a large extent being privatized, health, education, etc. seems to have warranted the idea of involving the private sector in infrastructure funding and execution. Recall that a former president of our country, Olusegun Obasanjo signed the enabling act providing the regulatory framework for private sector involvement in infrastructure development. This provides the concepts of build operate and transfer, public-private partnership and rehabilitate, maintain, operate and transfer. To what extent have there been these approaches in our dear country?
Private sector involvement in infrastructure development has become the trend in many countries. However, the environment here differs widely from places where the concept of private sector financing of infrastructure has worked satisfactorily. Two major differences stand out. The first is the size of the private sector in terms of its proportionate share of the resources available in the economy. The second is the state of the economy and the competing investment priorities facing the private sector. The peculiarities of the Nigerian situation need a careful consideration for this concept to be employed satisfactorily in Nigeria.
Government remains the major force in the economy and controls a disproportionate share of the gross domestic product (GDP) Despite the reduction in the role and responsibility of government in the economy, its control of the resources of the nation has not reduced. Instead, there is heavy borrowing from foreign partners to “finance projects”, and even the private sector through the sale of long-term debt instruments.
This means that the public sector is actively competing for the limited resources in the hands of the private sector.
This we have a situation of the government reducing its responsibility in the economy and society but at he same time increasing the level of resources in its control.
We believe that pushing more economic responsibilities to the private sector needs equal handover of financial resources required to meet the additional tasks. The size of the private sector is not quite large to make a remarkable impact in building infrastructure.
Wither the government borrowing heavily already, the amount of resources left and the cost and conditions at which they are available will drive up the cost of such infrastructure projects and consequently the cost at which they may be available for public use. As it is the experience elsewhere, if the cost of using the infrastructure built by the private sector is unduly high, nobody will use them.
While therefore empowering the private sector or providing the enabling environment to become the real engine of growth in the economy makes a lot of sense in the light of the abysmal failure of government over the years to fulfill even basic obligations.
The question must still be asked as to what role remains for government if it divests itself of more and more responsibilities recall that the private sector is the engine of growth. Successful businesses drive growth, create jobs and pay taxes that finance services and investment. In developing countries, private sector generates 90 percent of jobs, funds 60 percent of all investments and provides more than 80 percent of government revenues. Partnership with the private sector in the project development process can unlock additional value for inclusive development. Some states such as Lagos, Rivers and Ogun have used some of the approaches presently extensively and to the advantage of all partners.
The truth is there cannot be complete government abdication for driving growth and development especially in an underdeveloped environment such as ours. All government needs to do is to overhaul its machinery and processes to enable it deliver projects efficiently and with less corruption, especially in places which hold few attractions for private capital.