"Government should explore innovative finance to fund infrastructure"

"Government should explore innovative finance to fund infrastructure"

Mohammed Abba Tor, the President of the Nigerian Institute of Quantity Surveyors (NIQS). 
- 25th of May 2020 -

As the new NIQS president, what type of reforms are you bringing on board in the institute that will boost the construction industry in Nigeria?

The Nigerian Institute Quantity Surveyors marked her 50 years of existence in October 2019. As we begin the second 50 years, there is the need to recognize the challenges posed to quantity surveying profession by globalization, rapid technological advancement and constantly changing customer needs and requirements. There is equally the need to identify and unlock untapped opportunities for the benefit of our members as well as repositioning the institute for better service delivery.
In response to the above challenges, the institute embarked upon systematic reforms, including system rebranding and adoption of corporate governance principles, both of which are aimed at sustainably delivering value to our esteemed clients and the general public. The rebranding roadmap signposts commitment of our members to deliver services to total customer satisfaction. It will be launched during the forthcoming workshop mentioned above and will receive a substantial boost as we unveil NIQS Brand Ambassadors later in the year. NIQS Brand Ambassadors will be composed of quantity surveyors that excelled in their respective spheres of endeavor such as politics, public administration, business, corporate world, traditional institutions, academia, military/paramilitary and private consultancy.

Introduction of robust stakeholder engagement strategy by this Council ensures that members have a greater say in how the Institute is being managed.
At the industry level, the institute has started reaching out to other professional bodies in the built environment. I led a delegation of NIQS on a visit to the President and Council members of Nigerian Society of Engineers on March 18, 2020. The discussion was frank and fruitful and centered on ensuring collaboration and inclusivity among professionals with a view to moving the construction industry forward. We intend to continue the visitation to other professional bodies as well as critical stakeholders after the Covid-19 Pandemic.

Nigerian government at all levels has traditionally financed the construction of infrastructure project and the like from their fiscal budgets with little or no support from the private sector. With the present economic pressures on the fiscal budget, which approach of project financing can be sustainable?

Infrastructure supports and drives the economic activities of any country. Unfortunately, there exist a wide infrastructure deficit in Nigeria, which is challenged by growing population, rural- urban migration, technological advancement and aging facilities. Financing infrastructure projects from fiscal budgets with little or no support from the private sector is not sustainable. The economic pressure on the budget is becoming acute, occasioned by oil price volatility, rising current expenditure and cost of governance generally. It is therefore appropriate for one to join in the call for government to diversify the economy in order to ensure sustainability in revenue generation.
The government should explore enormous opportunities offered by innovative financing as viable approaches of funding infrastructure. Some viable options include Public Private Partnership (such as build-operate-transfer, build-lease-transfer, design-build-operate- transfer, build-own-operate, build-own-operate-transfer, lease-develop-operate) and borrowing from Pension funds. Road Infrastructure Development and Refurbishment. Investment Tax Credit Scheme was earlier mentioned. The Federal Government’s plan of borrowing N2trillion from the pension fund of N10 trillion as announced in January, 2020 is in the right direction.

However, for Public Private Partnership models to be sustainable, the following issues need to be addressed: Prudent management of completed projects to ensure that enough returns are made to settle debts, particularly economic infrastructure. Secondly, policy and regulatory reliability, consistency, stability and enforceability to engender investors’ confidence. Thirdly, Legal frameworks should be strengthened to offer desired comforts to domestic and foreign investors.
Others are stakeholders engagement – the various stakeholders’ interests that sometimes conflict with each other must be identified, classified and appropriate engagement plan put in place; provision of favourable, conducive and investment friendly environment to the contracting parties to attract and retain investing public and project management team retained for each project should be supported by all stakeholders with a view to ensuring that the project is completed within approved budget, schedule and to specified quality.

There are fears that another recession is looming with the drop in oil revenue and spread of coronavirus, what can be done to stave off recession in the construction industry.

There are strong indications that recession is likely, following the drop in oil prices and partial lockdown of the economy. The construction industry will be under tremendous pressure, because capital projects are the most affected procurement under economic recession.

In our proactive approach to issues of national development, NIQS organized a webinar conference and at the end made far reaching recommendations, such as

ONE: The three tiers of Government need to prioritise their spendings and focus more on procurement and provision of necessary healthcare facilities. The construction aspect of the health care projects will boost activities in the sector to some extent, thereby creating jobs in the Industry.

TWO: Government should encourage companies to increase manufacturing of local materials, including possession of automated production models that can fast-track availability of construction materials and goods, thus filling the void created by lower importation.

THREE: Stimulus should be provided to construction organizations to enable them cushion the effect of the pandemic. This will minimize lay-off rate and reduce negative social- economic impact of the pandemic.

FOUR: Government should through the Central Bank of Nigeria prevail on commercial banks to reduce interest rates for firms in the construction supply value chain. This will make investment within the construction sector more attractive and will boost its activities.

FIVE: Construction firms should optimize off-site assemblage of construction components. This will minimize disruption of remote working and supply chain activities.

SIX: Consultancy practices should consider diversification as a viable strategy to meet the challenges of post Covid-19 recovery. An evolving and important area is the sustainable development and adoption of green building technology. This is the current and viable
direction of global practices in the built environment. Corporate firms must explore and maximize the business perspectives of this evolving trend. This will assist in mitigating long-term impacts for the present and upcoming practitioners.