Infrastructure Bank CEO calls for Multilateral Development Institution Funding of Projects in Nigeria
Nigeria has very high infrastructure deficit that requires huge amounts of money to fix. Funds from annual budgets are ineffective in this regard, which is the reason the Chief Executive Officer of The Infrastructure Bank, Mr. Adekunle Abdulrazaq Oyinloye
The National Integrated Infrastructure Master Plan (NIIMP) concluded recently by the Federal Government notes that Nigeria will need an average of US$25billion per annum i.e. (7% of GDP) in the next 5 years, to kick-start the nation’s infrastructure renaissance. The NIIMP further projects that a total of US$2.9 trillion needs to be invested in Nigeria’s infrastructure over the next 30 years to sustain her economic growth.
The Managing Director/CEO, The Infrastructure Bank Plc, Adekunle Abdulrazaq Oyinloye reminded participants of this development at the 2015 edition of the annual general meeting of the Association for Consulting Engineering in Nigeria (ACEN) held in Lagos, recently.
Oyinloye said the sheer size of funding required “is indicative of the stark reality that the government does not have the capability to bridge the infrastructure deficit on its own, and urgently requires alternative means of funding large ticket infrastructure projects.”
Where to look… One of the reliable ways of sustainably funding infrastructure projects was through funding from MDIs, he said, adding that for several decades, MDIs have played significant roles in financing infrastructure, globally. He said sub-Saharan Africa has been a major beneficiary of MDIs’ funding. “Indeed, MDIs are now an indispensable source of funding infrastructure in Sub-Saharan Africa. A case in hand, in 2012, the World Bank and the African Development Bank lent US$4.3billion and US$2.6 billion respectively in sub-Saharan Africa for infrastructure development, which constituted 70 per cent of all official capital inflows into Sub-Saharan Africa in that year,” he said.
Similarly, Nigeria has benefited hugely from such MDIs investments in key sectors of the economy, Oyinloye said but that the substantive contribution of MDIs to the national infrastructure landscape was well beyond financial investments. According to him, “While MDIs’ financial contributions, grab the headlines, MDIs have taken a keener interest in the design of projects, technical assistance and project preparation, sector development strategies and setting standards and quality of project implementation.”
Where ACEN comes in… He said this was an area ACEN could key into “by upgrading their technical capabilities and tailoring their service offerings to the capacity gaps of the MDIs in the area of quality control, technical assistance and project preparation. One recurring capacity gap within the infrastructure space is the dearth of specialised technical skills to robustly dissect the needs of projects and develop sustainable solutions, which can then be structured into developmental projects.”
He said well-structured developmental projects was better placed to easily secure funding from the MDIs communities, which in turn would make the nation a more attractive prospect for MDIs funding.
This, he said would ultimately result in a self-reinforcing positive funding feedback loop for infrastructure projects with MDIs’ funding at the core. “Indeed, with the design phase of projects, consultants must ensure the design concepts and parameters are fit-to-purpose for the country and address the specific socio-economic needs for the Project. Thus, technically capable local engineers are in pole positions to deliver value- for-money services for MDIs.
“While I personally have no doubt in the technical capabilities of our local engineers, ACEN must endeavor to align members’ skill sets and interest with the capacity gaps of MDIs operating in Nigeria, towards enshrining ACEN, as an indispensable resource to the MDI community.”
Regarding the construction phase of infrastructure projects that are backed by MDIs, he said the construction phase was critical and that by virtue of its nature was dominated by consultants, some of whom are ACEN members.
He said, “The buck has always and will continue to rest on consultants, when it comes to construction of projects, who must supervise, evaluate and monitor the construction engineers to ensure that projects are delivered on time, to budget and within scope.
“While this is good news, Nigerian consultants in this field are daily experiencing influx of highly capable foreign consultants. The challenge today for ACEN members is to stay above the fray by ensuring they acquire the latest tools and advance skill sets in their chosen areas of mastery, which when combined with local knowledge, gives them advantage over their foreign counterparts. ACEN could thus play a leading role in the physical development phase of infrastructure projects. The need for competent technical hands to assure a disciplined execution during the actual construction of an infrastructure project cannot be over emphasized. The World Bank itself had identified the criticality of the imperative of ensuring disciplined execution of projects it funds. In a review of the quality of its project portfolio, the World Bank found that many projects languished uncompleted, once the design has been completed and funds been made available.
“Clearly, a successful infrastructure project depends on factors other than availability of funds or completion of design work - it equally depends on disciplined execution of the physical development phase of such projects. Herein lies an immediate opportunity for ACEN and its members. The MDIs are a bountiful opportunity for ACEN members to expand their technical skills and put it into good use by participating as consulting and supervising engineers for the construction phase of projects.”
Another critical aspect of the successful implementation of projects back by MDIs, he said was the operation and maintenance phase, which extends well beyond the preparation, design and construction phases of a project.
Oyinloye said the conference theme, ‘Multilateral Development Institutions: Strategies for Consultants to Key into their Development Agenda,’ was appropriate since it “seeks to explore the development opportunities made available by Multilateral Development Institutions (MDI); it is absolutely apt that the Bank shares its extensive experience with ACEN delegates, towards unlocking opportunities for synergy between ACEN and the MDI community.”
The forum, he said “serves as an enriched platform for charting a constructive way forward to better integrate ACEN members into impactful infrastructure projects that will help the nation achieve its development goals, in line with the Change Mantra of the present administration.”
ACEN’s role… In his presentation, the CEO Ove Arup & Partners Nigeria Limited, ‘Kunle Adebajo, an Engineer, reminded participants that one of the main aims for the establishment of the Association of Consulting Engineers of Nigeria (ACEN) is:
‘the development of Consulting Engineering practice in Nigeria by the mobilisation of private sector Engineering Consultants for the advancement of the Consulting Engineering sub-sector of the built environment.’
Adebajo said the focus of ACEN’s efforts is therefore to ensure that: the highest levels of technical competence and business ethics are brought to bear on the practice of the profession in Nigeria, saying this would in turn result in the highest level of quality of Engineering Projects for the Nigerian people, at the most cost-effective prices.
Member firms, he said should collaborate and show commitment and willingness towards acquiring the necessary skills, adding that there was the need for collective responsibility of the firms’ owners, managers and senior staff; substantial contributions in terms of time and resources are required. ACEN, he said should “Seek support from government to create the right legislative policies and operating environment for the development of local member firms to international standards; promote excellence in education of engineers and encourage member firms to set aside fund for education and training; work in concert with other international bodies (e.g. FIDIC) to remove obstacles arising from work selection criteria and methods used by the MDIs. He also set out roles for the government, saying “The required government initiatives are by legislative actions required to: Recognise consulting engineering professionals as partners in the development process; ensure that contractual obligations are met especially in respect of payment for services; general support for Capacity Building effort by sponsorship.”
He said the Multilateral Development Institutions need to be seen to encourage meaningful participation by the member firms in their projects.
Procurement policies should be such as to support efforts at promoting the development and use of local consultants; promote partnering with international firms for knowledge transfer. Emphasis could be given to this by raising the scores and also during post projects’ review and analysis; sponsor Capacity Building efforts as part of Corporate Social Responsibility.
In a welcome address, the President of ACEN, Dr. Temilola Kehinde said in the over 30 years of their existence, the annual conferences has always been used to break new grounds, expand frontiers and map out new vistas in the development of the consulting engineering sub-sector in Nigeria.
Kehinde said, “Some of our older and “bigger” members, and indeed the more daring of our middle-sized firms, had prospected opportunities for service on projects being midwife by the World Bank and the African Development Bank. But I am safe if I say that such engagement have been few and far between.
At one of our engagements with them early in 2015, one of these organizations did indicate that less than 5 per cent of their projects were being handled by indigenous Nigeria Engineering Consultants.
“Indeed, the World Bank in Nigeria, had established a threshold of project costs, I think the figure is US$300,000, where projects falling below this level are reserved for local consultants. The indication is that this “right of first refusal” had not even attracted enough interest from our members. And where Nigerian firms had even come up, they are not members of ACEN; and the quality of service being delivered may not have been the best possible, and may have even blunted, rather than expand, future opportunities.” Kehinde said he led a team of ACEN members on a visit to some MDIs and that there was on-going talks of partnership between these institutions and his association members.