Private sector will get good deal in bridging infrastructure gap – ICRC Boss

by Editor

April 3, 2013 | 10:30 am
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 Q: Why was the Infrastructure Concession and Regulatory Commission Established and what was its mandate?

A: As a developing country, we have not reached the point of infrastructural excellence if compared with other countries. You would realise that we have not yet harnessed the resources that would enable us have the needed infrastructural setting in our country. We as a commission have realised that we could do more and better in all these. If all of us realise the gift that God has placed on us in this country, it would spur us to work harder. Candidly, I have not seen any nation that has been blessed like ours. Again, we are aware that we have our own handicaps; whether it is challenges of power generation or infrastructure at various levels, we are all aware of the handicaps. I know how many times that I have been trapped in lifts. In all these, there is a pointer to the fact that we have a decaying infrastructure.

The ICRC was established by an Act of parliament in 2005, but had its board constituted in 2008.The ICRC has three clear mandates: aim is to work closely with the ministries, departments and agencies to develop, finance and assist in the development of the infrastructure. I have over time developed a thick skin on the challenges we have in terms of comparing with the so called developed world because here that certainty is not there yet in terms of infrastructural provision; I am creating these entire pictures for you to understand that the mandate of the ICRC is a very huge one. It is a mandate that is supposed to address the infrastructural deficit in the country, and the infrastructural decay is almost being witnessed in all sectors of the economy. First you can see the level of our roads, Nigeria is richly blessed and especially under the Military regime of General Yakubu Gowon, he did very well such that Nigeria was able to gain some mileage in road construction till 1975, but unfortunately we did not continue the momentum.

In comparison with other countries around us, we still have done relatively well and we still need to do better. We have discovered that there is a gap between our potential and where we actually are, that is why the commission is on course. Urgently, we do not have a functional railway throughout the country yet, but the commission is mandated to deliver on this.

When we say infrastructure, it is not the normal way of procuring, but the normal way is to go through the contract procurement system. The creation of the ICRC or the mandate is that there is bound to be a paradigm shift, government may not be the key figure here just as in normal budgetary provision, so there is need to bridge the infrastructural gap apart from the normal budget status. In bridging that gap we would like the private sector to come in and do that on a PPP basis-Public Private Partnership, in such a way that the private investors would bring in their money, take up the government facility and take off with the project.They can design, build, operate and transfer. They could also rehabilitate. So, there are various forms of PPP, but the mandate is try and do that.

Second mandate is on ensuring on the execution of our promises, and effective execution of those promises. To also ensure that whatever concession agreement that the government has entered into with the private sector as in road construction or the likes, are taken into full scale operations-to ensure that they are monitored and implemented, according to the terms of engagement. In summary, the mandate of the ICRC is towards addressing the infrastructural deficit in the country. Government cannot do it alone and is very much desirous of partnering the private sector in order to bridge the infrastructural gap. Let me quickly add that because it is a new innovation there could be the possibility of resistance since it is a paradigm shift. Just like history students would recall that it was the earth that moves round the sun in about 16 century not the other way round and the scientist that had the correct view was punished because of human nature which is always resistant to change. The issue is for us to bring up a new idea, there is bound to be resistance, but as long as one remains focused in his idea, there are bound to be people buying into the idea. Before we came on board, the former board had been able to ensure that the PPPs are accepted in MDA’s, so now MDAs as a result of the circular that was circulated in the various MDA’s by the Head of the Service of the Federation, insisting that in each of the critical ministry, we have PPP Units to be manned by no less than the position of a director. In that regard, you could actually see someone who could take a decision that could reach the permanent secretary and be acted upon accordingly by the minister.

The World Bank had actually insisted that where there is an infrastructural problem, there are bound to be wealth creation opportunities, return on investment, how do we plunge into this philosophy?

I am glad you were able to tie the question up towards employment generation. Honestly, you quoted the World Bank well, and I allude to their saying that there is a linkage between investment in infrastructure and the growth of the GDP and the performance of the economy. So, an investment in one percent of the infrastructure would inadvertently translate to a growth in the GDP. So, there is obviously a linkage between infrastructural upgrading and growth of the economy. This is because of the linkage between the availability of infrastructure and facilitation of movement of goods and services that drive the economy. For instance if I am a farmer and had gotten my farm produce ready, but it takes me 10 hours to move the goods from the farm to the market, you would discover that the ones that would spoil would spoil because of the bad infrastructure that abound; so also is the other way round if there is good infrastructure that would facilitate easy movement of goods and services. Whether it is Calabar to Markurdi or Makurdi to Maiduguri, easy flow of goods and services would always facilitate and drive the economy smoothly and even ensure wealth creation, improve efficiency, and ensure value addition. But if the bridges are broken and the roads are filled with pot holes, chances are that the activities that would be done in a short span of time would take longer time and this will drag the economy also. Therefore, that is not cost effective or cost efficient and would not be able to produce the required result that we want. So, the linkages exist between good infrastructure and good economy. Imagine if you are going to build a road from Abuja to Kaduna, by the time you have employed more hands to build that road, you would have created more jobs and other job opportunities would open up too. You need the technicians, you need the road builders, you need the artisans, engineers, but as it is obvious in the economics, if I am employing, I am not just employing the individual because the multiplier effects abound. You have four people or more that are dependent on the individual. By the time you do that your purchasing power is increased and you are going to buy goods from somebody and the chances are that everybody would have at least something to do and the restiveness would not be there if everyone is meaningfully engaged.

What are the recorded successes of ICRC and the prospects it has?

The commission was first established in 2005 and the board got inaugurated in 2008 and that board which has just been dissolved was led by no other personality than the former head of State, Ernest Shonekan, and within the provision of the Act establishing it, the ex-officio members are the critical members of the economy of the country. One, you have the minister of Finance as an ex-officio member of the board, you have the attorney general of the Federation as an ex-officio board member, you have the Central Bank of Nigeria Governor as an ex-officio board member, with the director-general, who runs the organsation on a daily basis as a member. In addition, we have members representing the six-geopolitical zones of the country.

I think it is only the ICRC that is very gender sensitive in all these positions. We have two women on the board of ICRC that are coming from the private sector, though others are also represented from the six geo-political zones of the country .So, the idea is to create a public institution that would be driven by the private sector. So, even in terms of our recruitment it is a marriage between the private sector and the public sector. With regard to the last board before I came on board, I think the board has done extremely well and the president has applauded that as well as we the foundation members. We believe that they have set up the institution and we are continuing from where they have stopped.

They started from the scratch, and you know it is not easy .So, in building the house there ought to be the foundation. They have done well by putting a national policy in place that would drive the process, they have crafted the policies and had gotten allocation for us, and they had recruited staff and had given us a framework upon which to move forward. As I said I have just been on the board for twelve years and ours is to build on were the last board stopped.

As I said, they have done well, because it is not easy to start anything from the scratch. Also, during their tenure they were able to create awareness on PPPs, an environment that would appreciate the new thinking in government. Having said that, some would argue that we have not yet seen the infrastructure. What we intend to do is first, we are a regulatory agency, to regulate the concessioning of the projects, of assets of government.

Our plans on the way forward ?

We have not been able to reach out to the Nigerian people in charting a way forward. So, there is a bit of deficit in terms of our engagement with the public, and the wider Nigerian society to know our mandate, why are we set up, and how we would collaborate with them. Notably, in the last twelve weeks, we are on course in holding a strategic management retreat for all the staff of the commission which would enable us articulate our vision, mission, values that would chart a way forward for us. There are huge expectations for us to be met and most often we have been accosted by people on what we are really doing. So there is lot of work for us and we acknowledge that and we are already planning towards that because without being effective and being seen and known, we would not make meaningful impact. Presently we are on staff retreat to enable us address issues as they are. Basically, we had held town hall meetings and we are able to chart a way forward for ourselves. The retreat is targeted at how we can become an effective organisation, deliver and meet the expectations of a wider society. How can we be relevant and be active? How do we deliver our mandate because it is clear? So, even now we are debating and we should be able to come out and say this is the way forward. Another strategy is by the time we speak to you and speak to some people, we would be able to open up the institution more and look and say this is what we are doing. Secondly, as a regulator, we are supposed to produce guidelines and regulate transactions.

What are the challenges you have had with some of your Private sector partners in terms of delivering quality services?

We have been having discussions with many of them and assuring them that because you had challenges, it does not mean we would not be able to work together again.

What kind of synergy do you have with state governments?

Ans: First, the ICRC is a Federal institution working with the different agencies of the federal government. That is where our mandate predominantly resides. However, we would appreciate that Nigeria is one country and one economy. If it is good at the center, it is more likely going to be good at the state. If it is good at the states, it is going to be good at the centre. There is clear delineation of the Federal, State and Local governments, and I thin k they were put there because of administrative reason. Beyond that,the infrastructure that we are going to do passes through states. If we have a rail project for example, from Markurdi to Maidugiri, it is a Federal Infrastructure but in states. At the end of the day it is serving the same people in a particular country. We are to encourage states also to set up PPP in their states’ think tank and those who are already buying into PPP are already seeing the vision. We have about 15 states that are in one form or the other collaborating with us, and participating in our programmes. Lagos itself has been so proactive and they have a PPP unit that is almost a bureau of its own. That is in their own laws basically it is one government, one people and one country. An investor could decide to take up Sokoto or the any part of the country for his business. So, there is synergy and collaboration.

How have you thought about return on investment so that it would be a win- win situation both for you and the investor?

President Goodluck Jonathan has given an assurance in that prospective investors are going to smile and have enabling ground to invest. So, that is why it is called a PPP arrangement. You know the private sector is wiser than you think, ours is to set the policy and the regulation, and they would come and invest. Let me give you an instance, somebody could say or an investor would say that we would do a particular bridge at the cost of N10 billion which ordinarily would costN 2 billion, it is at this point that the parties involved would have a business dialogue and ascertain the cost, the project, the duration, the terms, the agreement ant the profits, the margin. We would input all these with inflation and the likes together and put the things that are agreeable together. When everything is put in proper perspective then he would know whether he could come and do it or not. So, he would come prepared and we come prepared too, it is on that basis that we could agree on expert knowledge. This is the module and we would take it up from there.

What is your vision for ICRC in the next four years?

I would not assume I would be there in the next four years, since I am only acting and I could always talk on the ICRC as an institution. I want to see an effective institution. I would want to see an institution that would impact on the lives of our citizens, an institution that would be part and parcel of development. I want to see an institution that would discharge its mandate in an effective manner. We need the support of our principals and looking at our former board composition spearheaded by the former head of state, you would discover that government meant business and wants to add value. To the best of our ability we would deliver and would not fail.



by Editor

April 3, 2013 | 10:30 am
12893  |   93   |   0  |   Start Conversation

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