Ladies and Gentlemen;
Thank you for inviting me, and also thank you to NIAF for the support they have provided to Nigeria in the area of capacity building and reform for infrastructure.
I think the biggest lesson that all of us can glean about infrastructure generally is the impact on our lives.
The man on the street must be connected to it and understand it.
Perhaps more than we have ever cared to talk about at the street level, it is infrastructure that determines our quality of life.
It is infrastructure that helps define how long and how well we live. Infrastructure is definitive in the question of whether a child dies before 5 or lives up to 80 years.
It is infrastructure that defines how long it takes to travel a fixed distance, in what comfort we do so, and at what cost to our disposable income.
It defines how far or how near we have to look in order to acquire skills for our survival. It defines whether we are secure or insecure in our homes, communities, cities or countries.
Infrastructure is certainly defining in whether natural disasters result in temporary displacement or snowball into a humanitarian disaster.
Infrastructure is the big currency that no Central Bank prints but which all Financial Systems can support. Its sufficiency or dearth is a product of a choice between fiscal profligacy or fiscal prudence by a State.
All of what I have said attempts to sum up the presence or absence of roads, bridges, hospitals and clinics, airports, seaports, ferry terminals, bus systems, bicycle lanes, traffic systems, Internet penetration, schools and universities, security apparatus, emergency response, drains, flood control systems, water supply, firefighting systems, telephone connectivity and, of course, electricity.
The list is, of course, almost endless. As the human civilization evolves, the quality, type and complexity of infrastructure it procures is defined by the collective aspiration of the people of a particular State.
In another sense, infrastructure projects national strength; it separates the boys from the men, and the big nations from the small nations.
But one thing is also certain–infrastructure ages, and needs to be renewed from time to time, just as it needs expansion to respond to the number of users as a result of a globally expanding population and urbanisation.
Nigeria and the UK
Except probably for Asia and a few European countries, who have managed to keep relatively smaller populations and are not migrant destinations, many of the world’s leading economies are struggling with aging infrastructure.
The position in the UK is perhaps best captured by her own media in the editorial in The Times of Saturday July 23, 2016, titled ‘Build and They Will Come.’:
“All eyes are on the UK economy and it needs a makeover. With congested roads, patchy broadband, deficient airport capacity and a dysfunctional railway network, Britain is crying out for the productivity boost that a burst of targeted investment in infrastructure would bring.”
Now, I have used that ‘patchy’ broadband, the ‘deficient’ airport, and ‘dysfunctional’ railway, and, without patronising the UK people or government, or putting down my own country, I will trade our airport, broadband and most of the rail service for the UK ones.
And this is where I come to the specifics of Nigeria’s infrastructure.
It is not that Nigeria lacks infrastructure, it is simply that what we have is insufficient and has aged.
Since the great construction boom of the 1970s, and the upgrade and maintenance which took place in the early 1990s under the Petroleum Trust Fund, managed by President Buhari in an ad-hoc capacity during a very dark political period in Nigeria, our population has grown much faster than our infrastructure.
For example, in Lagos, the two bridges built in the 1970s and the third one in 1991, which connect the Island and the Mainland, have not been added to, in spite of two oil booms between 1992 and 2013.
Between the early decade 1980-1990 when Jebba and Egbin Power Plants were built by the Buhari and Babangida governments, no major power plant was commenced until early 2000, a period of over a decade and a half. But during that period, our population exploded in leaps and bounds. But a lot of that is in the distant past.
Year 2000 is 16 years ago.
I will however look at the immediate past, today and tomorrow.
What is in the immediate past, between 2010 and 2015, is that oil prices soared and exceeded $100 per barrel, and we earned about $215 Billion in that period.
Today, we face challenging economic times. The commodities boom is gone. We have suffered consecutive negative growth and are economically experiencing a recession.
The reason is simple.
It is not what the Buhari administration has done, it is a result of the profligate fiscal policy between 2010 and 2015, when we not only under-budgeted (N4 trillion) in the face of deficient infrastructure, we also compounded it by providing 15% for capital expenditure, which was under-funded and 85% for recurrent, which we adequately funded.
If infrastructure drives growth as we have experienced from the great depression to the Marshall plan, and lately fiscal stimulus in recent years, our current economic recession is the result of yesterday’s policies and choices especially during 2010- 2015.
Sometime in March 2015, a little over a year ago, before the Buhari Government, a snap survey of four construction companies which I constructed revealed that they had laid off 5, 150 workers because Government was not paying these construction companies for work done.
Since my assumption of office, in the Ministry of Power, Works and Housing, meetings with contractors in power, works and housing reveals that contractors have been owed 2-3 years. These are the seeds of Recession, planted and nurtured between 2013 and 2014.
The Buhari government knows the cause, and has designed the proper solution: fiscal stimulus and capital spending.
So, from N4 Trillion average budget in a time of plenty, this administration sets an ambitious N6 trillion with a 30% capex.
It pays serious attention to its budget as the article of faith that defines its commitment.
Since the budget was passed in May, 70 construction companies got paid N63.169 Billion for Q1 in Works alone.
The response is that in the last few weeks since budget was passed, construction companies that had demobilised from their sites and laid off workers due to lack of payment since 2014, are re-mobilising to rail, road, power and other construction sites, and re-calling workers.
The Kaduna-Abuja Rail project, which was commissioned but never ran in the past Government, was opened to public service on 26 July by this new Administration.
These are the first signs of productivity; they signal a clear pathway out of recession, and although results take time to manifest, Nigeria has chosen an appropriate pathway out of economic difficulty.
We will recover from this recession period and also deliver new infrastructure and upgrade aging ones.
What can the UK do or learn from this?
I may not be the best suited commentator on how the UK engages Nigeria. This is a matter in the realm of Policy and Economic choices for the people and government of the UK.
However, I think history provides a guide for this ?
In the early 20th Century, when our infrastructure was developed by the UK, up to the 1970s when we were the UK’s largest trading partner, how did the UK’s economy fare?
In that period our inter-state Rail was built by the UK, but today China is building our inter-city Rail in spite of a language barrier. But how is the UK economy faring compared to China?
A few months ago when my topic was chosen, and this date was fixed, the EU referendum had not taken place. Now that it has taken place, and Brexit has occurred, my only suggestion is that in charting a way forward for renewed prosperity, UK must look back to partnerships that worked in the past.
The Nigerian market is bigger than what it was in the 20th century. About a third of Europe with a large youthful base; but its needs are different and it has evolved from a colony, through military dictatorships into a sovereign democracy.
I acknowledge DFID, NIAF – for the consultancy and advisory support.
However, more needs to be done. There is increasing opportunity for private capital in Power, Roads, Housing and other public infrastructure in Nigeria.
A re-engagement with Nigeria in a relationship of shared prosperity can be a useful way for the UK in her quest for growth after Brexit.
Thank you for listening.
Babatunde Raji Fashola, SAN
Honourable Minister of Power, Works and Housing