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Nigeria: Getting PPPs right

Laurence Carter's picture

The Nigerian government’s Infrastructure Concession Regulatory Commission has blazed an important trail, publishing details of 51 Federal Public Private Partnership (PPP) contracts—the culmination of a year’s work with the World Bank to ensure that all, non-confidential information is easily accessible to the public. We hope other countries will follow Nigeria’s trend-setting lead.

The country’s infrastructure needs are acute. It needs more railways, roads, and ports to get products to market; electricity for homes, schools, and businesses; more 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. Like governments across the globe, that is why the Nigerian government is turning to the private sector for investment, as well as technical expertise and management capacity to improve the delivery of its services. One way to do this is through PPPs, often in the form of long-term contracts between governments and companies for the provision of public services and infrastructure.
 
Let’s be frank: despite an uptick in 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 through too hastily and were poorly structured; several are now mired in disputes. The underlying causes of these problems are complex. In June, private sector representatives listed their main issues during a visit to Lagos by Joaquim Levy, the World Bank Group’s Chief Financial Officer. 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 in Nigeria is growing at an unprecedented rate. The link between economic growth and infrastructure is well-established. Any country that wants a robust economy and wants to create 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 their infrastructure costs from the budget. 
 
This is in no way a challenge unique to Nigeria.
 
Growing countries need more PPPs
 
This means there is a huge scope—and need—for service provision through PPPs. When designed well and implemented in a balanced regulatory environment, 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 Nigerian 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, tendering processes, and contract management are other important elements. This includes legislation that affects PPPs, as well as a sound court system and government bodies, such as PPP support units.
 
Knowledge of global best practices is critical to structuring transactions, preparing contracts, stakeholder communications and investor outreach. Much of this 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 PPPs helps to build trust and ensure a voice for citizens.
 
From our side, the World Bank Group is prepared to partner even more strongly with Nigeria, both 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 Izaweh, Acting Director-General of the Infrastructure Concession Regulatory Commission, who gave an inspiring speech at the high-level event 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?
 
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