19th March, 2013
By Sola Ogunmosunle
When Nigeria returned to democracy in 1999, one of the very first issues that characterised the polity is the clamour for the re-adjustment of our lopsided federalism, created by many years of military rule that was rather very autocratic. The other tiers of the federating units i.e. the states and local government areas have continued to make raucous demand for a drastic shift in our fiscal federalism. Particularly, they have been calling for the adjustment of the revenue sharing formula that sees the federal government go home with the lion’s share of the nation’s resources.
In Nigeria, the revenue allocation formula has given the federal government greater resources than it needs to perform its functions thereby leaving the states and local governments with more responsibilities and functions than they can cope with. It is quite obvious from our democratic experience that the states and local governments are closer to the people and they better understand the developmental needs of their people. People tend to benefit more from developments in their immediate environment. But because of the very limited resources going to the states and local governments from the federation account, it is a herculean task for some of them to even pay workers’ salary. It is, therefore, extremely difficult for most states and local governments to meet the developmental needs of their people
However, since infrastructural renewal and development in any state requires enormous funding, and the federal government seems to have turned deaf ears to the states’ demand for more money from the federation account, the time has come for states to become a little more creative by discovering other sources of income and funding and not to be totally dependent on the stipends from Abuja. They should explore the myriads of untapped potentials in their domains to generate additional funds that can be used to develop their states and improve the lot of their people. In the United States of America, USA, for example, as the state of Virginia is using the advantage of its arable lands for agriculture to develop so is the state of California tapping from the advantage of its entertainment industry. And now, one veritable approach that many of the states in Nigeria have not adequately exploited in addressing the paucity of funds, that has been the bane of visible development in their states, is the involvement of the private sector in governance.
It has been realised by governments world-wide that funding of infrastructural projects can no longer be sustained by the government alone without the participation of the private sector. Public-Private Partnership (PPP) is a contractual relationship between the private and public interest as a systematic collaboration geared towards ensuring communal, state or national socio-economic development that is comprehensive and self-sustaining. It is an arrangement with clear direction and defined roles and responsibilities of all the actors in the plan. PPP is a financial module designed to attract private investors to engage in infrastructural projects with short and long term benefits to the people. Various funding options available in PPP include Build, Own, Operate and Transfer (BOOT), Concessionairing, Join Venture, Franchising, Equity Participation and Leasing, especially for projects which ordinarily should have been handled by the government.
In adopting any of these varied intervention funding options, government is not abdicating its responsibilities but essentially releasing scarce resources for other uses and thus creating a win-win situation for the government and the private enterprise as well. Roads and Transportation, Housing and Environment, Energy and Water Supply and Tourism Development are some of the critical sectors where the exploration of the PPP can bring immense benefits to some of the states.
Other states can take a cue from Lagos state that has been taking advantage of the benefits that PPP offers. With regards to roads and transportation, for instance, the state is developing an integrated transportation system that is private sector driven. The popular Bus Rapid Transit (BRT) scheme, first of its kind in Africa, moves over 150 thousand passengers along the mile 12/CMS route with dedicated lanes. The greatest breakthrough in mass transit in the city will come this year with the commencement of the nearly completed Badagry expressway incorporating BRT lane and light rail. The state has also created an enabling long-term regulatory environment that is conducive for significant Public-Private Partnership (PPP) in the provision of water-based transport services.
The Lagos state government awarded a contract for rehabilitation and upgrade of approximately 50km Lekki-Epe Expressway to Lekki Concession Company Limited (LCC). The project, which will be executed under Public-Private Partnership (PPP), also grants LCC a 30-year concession. LCC will build the infrastructure, operate it for 30 years and later transfer it to the Lagos state government. This model in PPP lingua is known as Build, Operate and Transfer (BOT). In this way, not only has Lagos State started to enjoy new world class infrastructure as a direct consequence of this agreement, users of the road have also been experiencing the positive service-based approach that has been adopted by the Concessionaire to deliver key benefits.
Other projects of the Lagos state government that embrace the PPP approach include the Eko Atlantic City, the Lekki Free Zone, Save Our Schools Initiative, grassroots sports development, waste management, Rice for Job initiative, just to mention a few.
The major advantage of the involvement of the private sector in governance is the efficiency it brings to project management. The issue of wastes, delayed delivery and abandonment that is usually associated with public projects is highly minimised. This is as a result of the optimization of the returns on huge investment of the private sector.
However, the major risk in PPP, because of our finicky political environment, is for the political class in Nigeria to enter into atrocious PPP agreements with their families and cronies against public interest. Aside this, political and other parochial considerations could hinder the successful execution of PPP projects when the overall interest of the people is not properly factored. One other hindrance to the effective implementation of PPPs is the lack of local talent in the area of technical and structuring competence.
Since PPP is fast becoming an acceptable model for rapid infrastructural development in most countries of the world, it is vital that cash-strapped states across the country, and indeed the federal government, properly and effectively key into the unlimited window of opportunities that this option offers to enhance rapid socio-economic transformation. It is a better, safer and quicker way to get our dear nation out of its sorry state of rapid infrastructural decay. It is the way forward.
•Ogunmosunle is of the Features Unit, Ministry of Information and Strategy, Alausa, Ikeja.