The general state of infrastructure across the African continent and especially sub-Saharan Africa is acutely discomfiting. With the exception of South Africa, the continent’s largest economy, the complete vicinity is bogged down by harsh infrastructure deficits that have frustrated development programmes and marred growth prospects. The Southern African Development Community (SADC) countries have been comparatively better off in this regard with their efforts to excursion area-wide development by trade agreements, resource pooling and multi-nation collaborations. Western Africa, however, has been bereft of similar benefits due to complicate past and present exigencies. As a consequence, the economic possible of this vicinity has hardly been scratched.
In June this year, the World Bank approved a $1 billion loan for Nigeria to fund multiple development programmes including expansion and enhancement of the country’s massively deficient strength sector. An amount of $200 million was earmarked for investment in networking and technical upgrades to enhance electric supply. While this concessionary, interest-free funding comes as an undoubtedly welcome development, it amounts but to a tiny fraction of Nigeria’s overall investment requirement in infrastructure. In August 2008, the Nigerian Debt Management Office (DMO) revealed that the country needed at the minimum $100 billion in investment to develop four meaningful infrastructure areas – strength, rail, roads and oil & gas. The figure was calculated to align with the ambitious national goal of taking Nigeria to the top-20 world economies by 2020. Of the four sectors mentioned, strength alone would require an estimated investment of between $18 and $20 billion over the next ten years. With a current installed capacity of 6,000 MW against the total requirement of 10,000 units, only 40% of Nigerians currently have access to electricity.
The collapse of basic infrastructure and social sets was set off in the 1980s, after Abuja’s unhealthy dependence on oil exports decimated its agriculture and light manufacturing sectors. The static oil economy wiped out traditional and emerging livelihoods, creating rampant unemployment, poverty and degraded living standards. By 2002, per capita income was below the level for 1960, when Nigeria attained independence from British rule. In terms of infrastructure decline, strength happens to be the most hardly hit, but the government freely admits harsh shortfalls in a many other areas in addition. for example, the rail network is in shambles and today accounts for only 1% of national transportation1. The port service likewise suffers harsh bottlenecks and inadequate capacity optimisation. The over 100,000 km long road network is in disrepair at best and barely usable at worst.
Because of Nigeria’s strategic location and the abundance of its natural resources, infrastructure development in the country has pan-African relevance. The human capital of 148 million that makes Nigeria the most populous African nation is a workforce of uncharted economic possible. The country’s thriving informal sector, estimated to be as high as 75% of the total economy, also conceals tremendous possibilities for inclusive growth. Rapid SME development has hence been the mainstay of subsequent governments since the reinstatement of civilian rule in 1999. Nigeria’s ability to kick-start an enterprise dramatical change that will fundamentally alter its macroeconomic imbalances remains the quintessential challenge of its 2020 goal.
Infrastructure development is clearly going to be the first building block in this endeavour, and ground realities are pretty harsh as present conditions go. For Nigeria, the larger impact of infrastructure deficits is the high cost of doing business, for large corporations and small enterprises alike. Lawmakers need to draw up a comprehensive blueprint to reverse this trend in a time-bound manner. The following are two meaningful aspects in this consideration:
o The whole of Western African receives very moderate foreign private investment in infrastructure due to a slew of reasons ranging from high foreign exchange risks to low creditworthiness. The vicinity’s subdued ability to raise debt and inclination towards infrastructure sectors with limited regulatory intervention are further obstacles. Nigeria needs to rule the way in enhancing access to equity debt as a method of attracting projects with viable private participation.
o The ability of local finance markets to fund infrastructure projects is very low across the continent. Local long-term local financing is almost non-existent except in South Africa, which has been successful in developing an native capital market for consistent funding on functional terms. The absence of similar capacity in the rest of Africa method most of it is dependent thoroughly on grants-in-aid and soft loans from international development agencies.
For developing African economies, increasing foreign investment on infrastructure while simultaneously developing avenues for credible local finance is a daunting task. The current Nigerian government under President UM Yar’Adua acknowledges the challenge by listing infrastructure development as a cornerstone part of the 7 Point Agenda for realisation of the 2020 goals in addition as the Millennium Development targets. Some recent initiatives in this connection include the setting up of a federal mortgage bank, a housing authority and a national road maintenance agency.
That infrastructure will be the chief driver of all socio-economic development in Africa is given. What keep unclear are the ways and method that individual nations use, and the ground effectiveness of such measures beyond official statistics and proclamations. Nigeria has the rare opportunity not only to reverse decades of economic stagnation but also to keep up up an effective form for accelerated growth to the rest of the continent. The success of its long-term goal gathers wider significance because it is bound to have a gradual spill-over effect on its immediate geography.