Nigeria: Getting PPPs right
Last Friday, the Federal Government’s Infrastructure Concession Regulatory Commission blazed an important trail by publishing details of 51 federal public-private partnership contracts —the culmination of a year’s worth of work with the World Bank to ensure that all non-confidential information from the PPP contracts is easily accessible to the public. We hope other countries will follow Nigeria’s trend-setting lead.
Nigeria’s infrastructure needs remain acute. The country needs more railways, roads, and ports to get products to the market; electricity for homes, schools and businesses; water and sanitation to keep its people healthy and to support crops; and modern communications services for everyone.
But all this costs money, and a lot of it. That is why the Nigerian government—like governments all across the globe—is turning to the private sector for investment, technical expertise, and management capacity to improve the delivery of services. One way to do this is through the PPPs, long-term contracts between governments and companies for the provision of public services and infrastructure.
But let’s be frank: despite an uptick in the PPP projects in Nigeria—there are about 50 being implemented right now and another 60 in development—many have not lived up to their potential. Some were pushed too hastily and were poorly structured; several are now mired in disputes. The underlying causes are complex. In June, private sector representatives listed the main issues during a visit to Lagos by Joaquim Levy, the World Bank Group’s CFO. They said that Nigerian laws and regulations governing PPPs are not clear and that key stakeholders need more knowledge to plan, structure, and implement complex PPPs.
It’s time to get this right, as demand for infrastructure is growing at an unprecedented rate. The link between economic growth and infrastructure is well-established. Any country that wants a robust economy and creates jobs must stay on top of its infrastructure and related services. At the same time, we know that governments simply cannot afford to finance all infrastructure costs from the budget. This is in no way a challenge unique to Nigeria.
This means there is a huge scope—and need—for service provision through the PPPs. When designed well and implemented in a balanced regulatory environment, the PPPs can leverage scarce public funding and introduce private sector technology and innovation to public services. They can also bring efficiency and sustainability, while allocating risk between the public and private actors based on their capacity to manage it.
The government’s role is to create enabling conditions for private sector investors, and at the same time ensure that the needs of citizens are met. Sector reforms can help. Building a legal and institutional framework to support robust project preparation, tender processes, and contract management is another important element. This includes legislation that affects the PPPs, as well as a sound court system and government bodies such as the PPP support units. Also, knowledge of global best practices in structuring transactions, preparing contracts, stakeholder communications and investor outreach, are also critical. Much of this knowledge can be provided by a reputable transaction advisor, but the more a government has in-house capacity and know-how, the more effectively the partnership will work. And, of course, transparency and disclosure with the PPPs help to build trust and ensure voice for citizens.
From our side, the World Bank Group is prepared to partner even more strongly with Nigeria to increase its ability to build an enabling environment for PPPs and a robust pipeline in key sectors to attract more investors.
We can do no better than quote Chidi Izuwah, Ag. DG of the ICRC, who gave a most inspiring speech at the high level event last Friday announcing the release of the PPP disclosure website: “We hope these latest PPP transparency initiatives send a strong signal to savvy investors to invest in Nigeria’s infrastructure space.” Indeed. Could we dare to hope that the number of active, well-structured PPPs double in the next two years, and succeed in bringing more services to more citizens?
PPP disclosure website: http://ppp.icrc.gov.ng/
–Laurence Carter, World Bank Senior Director, Infrastructure, PPP and Guarantees Group and Rachid Benmessaoud, World Bank Country Director, Nigeria.