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How development partnership can grow infrastructure

Story by Maduka Nweke

The faltering of the nation’s economy is taking a great toll on Nigerians. It has forced a lot of experts and innovators to device means of meeting their needs apart from bartering their valuable goods for the scarce ones. One of these means is development partnership, a situation where one who has land could partner a property developer or government for the purpose of developing his virgin or fallow lands.
Development partnership could mean different things for different people and for different disciplines. But in the real estate sector, it could be described as a partnership where the land owner is different from the one financing the project development. Even in this parlance, it could as well take different shapes.
In the past few decades, developed economies like the United Kingdom developed a modelled variety of Public Private Partnerships (PPPs) for the delivery of infrastructure, public utilities and large services projects, achieving significant successes from harnessing the competences and expertise from both sectors. Emerging markets such as India and South Africa are also recording successes using tried and tested PPP templates to create, expand and modernise infrastructure.
It is apparent that these dynamic partnerships between the public and private sector have become inevitable across the globe. Aside partnership between government and the public, two private sector developers can partner to bring about infrastructural development. This could be between countries like in the case of Chinese government coming to provide Nigeria with infrastructure instead of loaning some money to its Nigerian counterpart.
In this instance, Nigeria financial need to fund provision of infrastructure from Chinese government could receive the service worth the equivalent of money it wanted to borrow. The Chinese government would provide the technical know-how, the engineers, the raw materials needed to bring about the infrastructure and at the agreed time while the country would pay the worth in monetary terms. There are other partnerships that abound, like when a man has a plot of land at a good site but has no money to develop it. In this way, a developer or a private individual could reach an agreement with the plot owner to develop and occupy until the rent covers the amount invested in the building then he leaves and hands over to the land owner.
Another strategy could be a situation where the agreement is that the developer will build two blocks of the same size and design and the plot owner hands him over one of the buildings as payment for the development.
According to Chief Obiora Ekwemozor, Managing Director, Obiekwems Cubicle Ltd, there should be legislation that could make government to develop plots for those who own them and device payment arrangement. “This reduce the charges and some other ways the developer could cheat the land owner. By this too, the land titles could be collected without much ado. In this way, if government say, built two 2×3 bedroom flats, one would be for the land owner while the second would be one which government gives out as quarter to any of its officials,” he said.
Nigeria’s infrastructure challenge is huge just to say the least. And the official figure being branded shows that housing deficit in the country is around 17 million housing units. This is the figure going round, though there is no empirical data to support it bearing in mind that Lagos alone has a serious housing deficit. Recent reports suggest that Nigeria requires between $12 billion to $15 billion annually for the next six years to meet the infrastructure requirements. This infrastructure need should not come from the government alone, otherwise, the Vision 2020 infrastructure target will not be actualised.
It has become evident that government alone cannot muster the resources (finance and expertise) to meet this need so the involvement of the private sector is not just desirous but necessary. Little wonder therefore that the majority of infrastructure projects currently underway at both state and federal levels are powered by PPPs. It is in order to augment government’s efforts on infrastructure that private sector should partner to bring about a drastic reduction in the current housing deficit. It could as well be called barter like in the Nigeria/China relationship where one who has landed property could provide a land to the developer who helps him to develop one for him and one for use. By this way one has used what he has to get what he has not.
Emerging countries in the Asia Pacific and Latin America, have continued to drive infrastructure development through PPPs. According to the Organisation for Economic Co-operation and Development (OECD) in Vietnam, PPP forum report in March 2008, shows that more than 75,000 greenfield projects have been initiated within a decade and half on the platform of public and private co-operation. Government investments in infrastructure projects have spurred increased economic growth particularly as small and medium scale businesses derive a plethora of opportunities and benefits therefrom. The private sector has therefore capitalised on the efficiencies of new infrastructure and services to thrive.
In Singapore, the world’s largest Sports Hub, estimated at $978 million, is currently being developed under a PPP arrangement from which the government divested in 2014. While PPP transactions are more recent in sub-Saharan Africa, there are already a number of success stories. The Kenyan government, in expressing its commitment to encouraging PPPs, envisages that 80 per cent of its projects will be financed through PPPs by 2030.
The World Bank estimates that every 1 per cent of government funds invested in infrastructure leads to an equivalent 1 per cent increase in Gross Domestic Product (GDP). Nigeria has not had a consistent history of investment in infrastructure.
However, government agenda shows that infrastructure development is gaining momentum. In the past 10 years, over 30 major infrastructure projects have been rolled out through PPPs.
The Federal Government, state and local governments have contributed over N10 trillion ($66 billion) to these. However, the total investment required to meet the Vision 2020 target for infrastructure projects is N32 trillion ($210 billion) and due to strong commitment, the figure is rising daily.

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This post was syndicated from The Sun News. Click here to read the full text on the original website.


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