Interview: Martin Wittig
To what extent has the public-private partnership (PPP) model been successfully used to develop infrastructure in Nigeria and West Africa?
MARTIN WITTIG: The PPP model has shown mixed results in the region. Although there are examples of success such as transportation projects in Lagos, the model is largely under-utilised. Major impediments include insufficient sector reforms to allow private participation, limited long-term policy visibility and stability, and low levels of expertise among most project sponsors operating in the region. Additionally, there is a lack of sufficient awareness among public and private entities regarding the potential of the PPP model.
What are the priorities for improving confidence among foreign investors in Nigeria?
WITTIG: Foreign investor interest and confidence will increase with reforms that facilitate private sector participation. This change is already happening in the region. For example, Nigeria is currently reforming its power sector and in the future, electricity generation and distribution will be owned and managed by private entities. It is important to note that these reforms will not change the investment environment overnight. Rather it will be a gradual process in which governments will improve in terms of making the right reforms, and private investors will gain confidence in the system.
Another priority in the region is to improve the quality of sponsors that can plan and execute projects on a par with international standards. Presently, less than a fifth of announced projects seem to even reach the financing stage. Improvements in sponsors’ ability to execute projects successfully will improve return expectations and raise investor confidence.
How can the Nigerian private sector be encouraged to participate in infrastructure developments?
WITTIG: One way to encourage the local private sector to invest in infrastructure would be through the provision of tax waivers or other financial incentives. Such measures could unlock the potential to fund infrastructure projects locally while also promoting investments in the formal economy. Nigerian investors would also be encouraged to participate if policy visibility and stability were improved. Moreover, the private sector needs to perceive sufficient security for their investments.
There is capital available in the country, but investors are reluctant to commit to the infrastructure sector, especially because of the long-term nature of payoffs.
Which projects in the region are expected to receive the most attention from private participants?
WITTIG: We believe the region will receive tremendous attention across a number of infrastructure projects.
In fact, Nigeria is projected to be the world’s fastest growing infrastructure market until 2020.
While oil and gas, mining and telecoms have received the most interest from private investors over the past decade, power and transportation projects will increasingly receive greater investment in the years to come.
This is because there is a real need in the market, and governments are finally taking note of the urgent crises developing in the region without adequate electricity supply, roads and access to public transportation.
What are the priorities to establish an effective West African transportation network?
WITTIG: Policymakers have to realise that an effective transportation network is a necessity for achieving high economic growth rates. One can sit for hours in Lagos traffic without moving very far; the waste of fuel and human capital is enormous. Governments can facilitate development by allowing projects to be implemented without long delays. Too often, projects are planned but then get mired in legal and bureaucratic challenges.
Besides delaying development, these setbacks can discourage future investment. The international community can support development by providing technical and project management expertise as well as partnership on projects to provide capital and lend credibility.
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