Opinion: These are the hitches in FG borrowing for Infrastructure

by David Temitope

Nigeria’s Minister of Finance, Mrs Kemi Adeosun, earlier in October, stated that the nation needs to borrow more in the short term, so the Government can execute critical infrastructural projects. In her exact words, “We need to tolerate a little bit more debt in the short term to deliver roads, rail, and power. That, in itself, will generate economic activities and jobs, which will then generate revenue which will be used to pay back the loans”. Mrs Adeosun is correct when she said infrastructural projects will generate economic activities. Investing in infrastructure creates income opportunities and generates jobs, directly and indirectly. For example, the construction of a cargo rail line will create jobs and sales for, civil engineers, geologists, accountants, surveyors, artisans, craftsmen, cement manufacturers and distributors, restaurants, etc. The communities the railway pass through are likely to experience an increase in sales of their agricultural produces. According to the International Labour Organisation (ILO) work in Aceh and Nias, it has been demonstrated that up to 2,200 workdays can be created per kilometre of district road rehabilitation.

Some Nigerians have raised questions, about the Government’s ability to judiciously use the loans for infrastructural projects, and not end up using it for recurrent expenditures or unnecessary capital expenditures. Mrs Adeosun stating the loans were for infrastructures, such as rails, roads, and power; has given Nigerians some level of exactness. Some have argued both for and against the loan. Those arguing against it, may not be blamed, as the usage of such previous loans by the Government can be arguably said to be ineffective on the lives of the masses. Regardless of your stance on the loans, there is a big elephant in the room, one which has been there for ages, and we must ensure it does not find its way into these loans. Either you support the loan or you oppose it, the Government is more likely going ahead with it. It is therefore important to examine a recurring problem, which is spending money on uneconomically-beneficial projects.

The Abuja-Kaduna railway began operation in July 2016, after being commissioned by President Muhammadu Buhari. The 186.5 km standard gauge track which runs from Idu in Abuja to Kaduna, is said to have cost an estimated $876 million. According to the Minister of Transportation, Dr Rotimi Amaechi, in August 2017, the Government spends ₦56 million per month on the railway. He further stated that, until the second quarter of 2017, the railway was generating only ₦16 million, but currently generates ₦1 million per day, which equals ₦30 million per month. Despite the increase in patronage of the railway, it still had a shortfall in revenue of ₦16 million, needed to meet up for monthly expenditure. With this data, it can be deduced that in the next two decades, the railway may not break even with the money spent to construct it talk more about being profitable.

This is a fundamental issue with infrastructure development in Nigeria. If we must spend money on infrastructures, it should be on projects with economic values. A proper benefit-cost ratio must be carried out, and with little or no politics, we should do away with unbeneficial projects and execute only profitable ones. Another issue with infrastructure as an economic stimulant is the type of jobs it gives the locals.

There is a virus spreading in Nigeria’s construction industry, one which may limit the ability of infrastructural projects to reduce unemployment. This issue is the encroachment of foreigners, more precisely, Chinese and Indians, into fields they perhaps should not be playing on. The continuous decay of Nigeria’s educational system has led many to believe Nigerian graduates are barely of any good. But rather than training those who are willing to learn, we simply turn a blind eye to the fact that every job in the industry, even non-technical jobs are being taken over by foreigners. Jobs such as, Financial analyst, procurement officer, carpentry and labour supervisor, iron benders supervisor, truck drivers’ supervisor, concrete workers, etc. which Nigerians will efficiently handle are being handed to foreigners. The foreigners earn high in dollars, while their Nigerian counterparts barely get a take-home salary. Should Mrs Kemi Adeosun be serious about creating jobs, meaningful employment, and not underemployment which will not eradicate poverty, she, the minister of Labour and Productivity, and the project contracting ministry must ensure they protect Nigerian jobs. They should also ensure knowledge transfer by incorporating understudy clause into Government contracts. This will enable indigenous firms to learn from their foreign counterparts so that one day; Nigerians will execute Nigeria’s infrastructural projects. This is when we can truly have value for our money, or should I say our borrowed money.


Op–ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija

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