Devonomics

Devonomics

It is difficult to answer questions about how Nigeria can and should achieve sustainable economic, social and political growth. This column takes a look at well known development economic theories and applies them to the unique Nigerian context.

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Nigeria and the Failure of Capital Expenditure

Akinkunmi Akingbade

Akinkunmi Akingbade

Akin is a Freelance Consultant and Writer with a background in Development Economics. He previously worked at Ventures Africa.

To some, the frustrations of constant traffic, inconsistent electricity, and frequent flooding are distinct drawbacks of living in Nigeria. But they all represent one common failing: infrastructure. 

Make no mistake about it, Nigeria's infrastructure is inadequate. Nigeria’s infrastructural regulatory agency, Infrastructure Concession Regulatory Commission (ICRC) estimates that the country loses ₦2 trillion each year due to inadequate infrastructure. Likewise, the World Bank believes that countries like Nigeria can make each citizen 3% richer each year just by closing its infrastructure gap. 

In light of this, it is particularly jarring to hear the Minister of Power, Works and Housing (PWH), Babatunde Raji Fashola suggest that his ministry did not complete any capital project in 2017, despite receiving the largest capital expenditure allocation across all parastatals. 

How does this happen? Before we begin casting stones, let's do a brief check.

 

PPP as the elephant in the room

Budget allocation to the PWH ministry is rarely without controversy. In 2017, the minister claimed that the amount appropriated for the Lagos-Ibadan Expressway was slashed from ₦31 billion to ₦10 billion by the National Assembly. And in July 2017, Julius Berger Nigeria Plc suspended its construction work on the controversial road, as the government had failed to pay debts just under ₦9 billion.

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