The federal government’s directive that all Public-Private Partnership (PPP) agreements must strictly adhere to the dictates of the Infrastructure Concession Regulatory Commission (ICRC) Act partly exposes the lingering inefficiencies in infrastructure development and poor accountability in the system, AMEH OCHOJILA reports.
If there is anything that has sufficient capacity to effectively bog down Nigeria’s developmental aspirations, it is the current state of the country’s infrastructure.
For decades, the Nigerian government has been battling dire difficulties in developing and maintaining critical infrastructure. No thanks to key factors including gross embezzlement of funds voted for infrastructure development, as well as declining tax revenue from oil.
According to experts, the country’s total infrastructure stock amounts to only 30 per cent of its gross domestic product, this falls far below the international benchmark of 70 per cent.
Besides poor application of funds and declining oil revenue that is largely responsible for the country’s sparse infrastructure, poor planning and oversight, lack of capacity, lack of funding, grant dependency and corruption, etc, studies say are responsible for poor municipal infrastructure management.
Agusto & Co., a Pan-African credit rating agency and a leading provider of industry research and knowledge in Nigeria and Sub-Saharan Africa in its 2024 Infrastructure Industry Report, painted a vivid picture of the country’s infrastructure situation.
“With a rapidly expanding and urbanising population, Nigeria faces a significant infrastructure deficit, projected to reach $878 billion by 2040. However, the country’s current infrastructure stock constitutes only 30 per cent of Gross Domestic Product (GDP) – far below the World Bank’s benchmark of 70 per cent.
“Furthermore, the nation ranks behind 23 other African countries on the African Development Bank’s Africa Infrastructure Development Index (AIDI). This considerable deficit hampers economic growth, sustainable development and poverty alleviation.
“Despite reforms such as the National Integrated Infrastructure Master Plan and the Highway Development Management Initiative, critical deficits remain, with only 30 per cent of the country’s estimated 200,000 road networks paved. Also, Nigeria’s railway network, plagued by vandalism and funding gaps, is still undeveloped.
“Despite being the cheapest means of transportation and capable of moving freight and passengers across longer distances more efficiently, rail transport constituted less than one per cent of the transportation industry’s contribution to Nigeria’s GDP in 2023, which further intensifies the load on roadways.”
The report in its overview further states: “The federal government’s allocation of N1.32 trillion (five per cent of the 2024 budget) for infrastructure is inadequate compared to the $100 billion yearly target set by the Master Plan. To effectively address this deficit, increased private-sector investment is essential. However, private investment in Nigerian infrastructure has been low – totaling $8.4 billion from 2013 to 2023, compared to South Africa’s $17.2 billion.
“Industry experts attribute the low level of private sector investment in Nigerian infrastructure to several challenges, including limited long-term financing options, inadequate maintenance practices, corruption, weak contract enforcement, and insufficient project preparation. Given the essential role of the private sector in addressing Nigeria’s infrastructure deficit, tackling these socio-economic and political obstacles to foster a more favourable investment climate is critical. Key strategies include establishing a dedicated fund for bankable projects, enhancing public sector expertise, enforcing contract sanctity, reducing corruption, and enacting targeted policy reforms. Ultimately, concerted efforts and collaboration between the public and private sectors will be essential in transforming Nigeria’s infrastructure landscape and driving long-term economic growth.”
To address recurring challenges and extricate itself from the web, which has over the years marred public infrastructure initiatives through poor planning, weak oversight, and irregularities, often leading to failed projects and wasted resources, the Federal Government recently issued a directive mandating strict compliance with the Infrastructure Concession Regulatory Commission (ICRC) Act for all Public-Private Partnership (PPP) agreements.
Public-private partnerships (PPPs) are a mechanism for the government to procure and implement public infrastructure and/or services using the resources and expertise of the private sector.
The directive, contained in a memo marked: BD/2000/EXP/S.800/I/3/50, from the Ministry of Budget and Economic Planning, emphasises that Memoranda of Understanding (MoU); Memoranda of Association (MoA), or any other contractual instruments executed for PPP arrangements without adherence to the National Policy on PPPs (N4Ps) or the ICRC Act of 2005 are illegal.
It further mandates Ministries, Departments, and Agencies (MDAs) to act strictly within the ambit of the law, underscoring the government’s commitment to restoring order and accountability in public-private engagements.
The ICRC Act, enacted in 2005, was designed to provide a comprehensive legal framework for private sector participation in infrastructure development. It empowers MDAs to enter into contracts or grant concessions to private entities for financing, constructing, and maintaining federal infrastructure projects.
The Act also established the Infrastructure Concession Regulatory Commission in 2008 to regulate these partnerships and ensure compliance with the law. But despite these measures, many MDAs have bypassed the Act’s provisions, leading to stalled projects, financial losses, and disputes that have undermined investor confidence and the credibility of PPP initiatives in the country.
According to reports one of the notable instances of the act not being properly adhered to is the Lagos-Ibadan Expressway rehabilitation project, which faced significant delays and disputes. Despite being structured as a PPP under the ICRC Act, the project experienced multiple setbacks due to deviations from the Act’s provisions.
These included allegations of non-transparent procurement processes and irregularities in contract execution, leading to legal battles between the Federal Government and concessionaires. The delays resulted in cost overruns, prolonged economic losses from traffic gridlocks, and diminished investor confidence in PPPs as a viable framework for infrastructure development in Nigeria.
A senior official of the Infrastructure Concession Regulatory Commission (ICRC), who preferred to remain anonymous, disclosed that in the past, MDAs often entered into Public-Private Partnership (PPP) arrangements or agreements under vague terms, sometimes labeled as “memorandums”, without proper oversight or adherence to ICRC guidelines. This lack of due diligence frequently resulted in liabilities for the government. To address this issue, the government has now mandated that all such arrangements must be thoroughly vetted and approved by the ICRC to ensure compliance and mitigate potential risks.
The Director of Press and Public Relations at the Ministry of Budget and Planning, Julie Jacob, when asked about the motive behind the circular, promised to provide clarification after a workshop that she was attending. She, however, failed to do so at press time.
However, an investigation within the ministry revealed that the directive, which originated from the federal government’s economic team, was aimed at curbing unnecessary financial leakages stemming from poorly managed concession contracts that have resulted in significant losses to the government.
Similarly, the director of press and public relations at the office of the accountant general of the federation, Bawa Mokwa, referred The Guardian back to the Ministry of Budget and Economic Planning for more information.
However, experts believe that the directive, if effectively enforced, could enhance transparency, attract reputable investors, and improve the quality and sustainability of public infrastructure projects. For citizens, it promises timely delivery of essential services, while for investors, it offers a predictable environment that minimises risks.
However, implementing the directive is not without its challenges. Many MDAs lack the expertise to navigate the stringent requirements of the ICRC Act, while reviewing and renegotiating existing agreements could delay ongoing projects, increase costs, and even lead to legal complications. Resistance from entrenched interests benefiting from non-compliance may also hinder progress. This would also slow down all processes with the already overburdened bureaucracy.
A Senior Advocate of Nigeria (SAN), Mohammed Ndarani, applauded the government’s initiative, describing it as a necessary step toward instilling accountability and transparency in the management of public finance.
He noted that any action that deviates from the ICRC Act erodes public trust and compromises the credibility of governance, emphasising the importance of government leading by example.
Similarly, observers have pointed out that the success of this directive hinged on the ability of the ICRC to enforce compliance and support MDAs in aligning their operations with the Act. Adequate funding and resources for the ICRC will be crucial to sustaining the reforms and ensuring meaningful outcomes.
He said that the Infrastructure Concession Regulatory Commission (ICRC) Act, 2018. A careful look at the provisions of this law will readily show that the objective of the law is to engender transparency, public trust, and confidence in the bidding process as well as, to guarantee prudent management of public funds. The whole idea is for the public (for whom the government exists) to see that the government, in executing Public-Private Partnerships, is guided by noble motivations, and not driven to such by prebendalism and nepotistic considerations.
According to the SAN: “Any action in PPP, which is at variance with the express provisions of the Act is illegal. The government cannot be seen to be condoning illegal acts, otherwise, it will lose its credibility and legitimacy, and with it, its power to demand strict compliance with not just the ICRC Act, but any law for that matter. What this means is that the government intends to lead by example.”
For Akoma Chukwudi, a contractor, the directive may further slow the pace of project execution, even as he also criticised the government for introducing additional bureaucracy to slow down project execution. However, he added that its long-term benefits far outweigh the drawbacks.
Enforcing compliance with the ICRC, he said, will help in proper vetting of jobs if devoid of corruption. He cautioned that if not properly monitored could turn into another avenue for corruption.
According to Monday Ikpe, an Abuja-based lawyer, adherence to the Act has the potential to transform Nigeria’s infrastructure landscape by fostering trust, efficiency, and collaboration between the public and private sectors. But to achieve this, the government must maintain political will, ensure inter-agency cooperation, and address systemic inefficiencies that have hindered progress in the past.
The federal government’s directive marks a significant step toward reforming Nigeria’s approach to public-private partnerships. Although the path forward is fraught with challenges, the initiative signals a commitment to transparency, accountability, and sustainable development. If sustained, it could redefine public-private collaboration in Nigeria and position the country for long-term economic growth and improved public services.
