The African Development Bank has recently completed an extensive study on the infrastructure needs in Nigeria. This report outlines the gaps in infrastructure identified by the AfDB and lays out a coherent strategy to close the gap for accelerated economic transformation.
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AfDB's Nigeria Infrastructure Pipeline: a Homestrings investment opportunity
1. AN INFRASTRUCTURE
ACTION PLAN FOR
NIGERIA
Accelerating Economic Transformation
African Development Bank Group
By Dr. Ousmane Dore, Director
Nigeria Country Office
African Development Bank
Summary of Report Prepared by the
African Development Bank for the
Government of Nigeria
2. African Development Bank Group
Outline
• The burden of poor infrastructure
• Key findings that emerge from the study
• Can the program be financed?
• What is required for effective
implementation of the program?
• Importance of maintenance
• Economic impact of the program
• An agenda for early action
OUTLINE OF THE PRESENTATION
3. African Development Bank Group
The Burden of Poor Infrastructure
There is broad agreement that the
status of Nigeria’s infrastructure is
unsatisfactory
4. Table 1: Selected Indicators for Infrastructure
for Nigeria and Comparator Countries
5. Key Outcomes for the Action Plan
● For each of the infrastructure sectors, a series of targets were
established for 2020
● With full implementation of the IAP, investment in
infrastructure would rise to a peak of 12% of GDP by 2016 and
then decline to about 10% by 2020
● Total fixed investment in the economy rises from about 22% of
GDP in 2010-11, to 32% of GDP by 2015, and remains at that
level through 2020
● As a result, growth of non-oil GDP increases to about 10% a
year in real terms during 2015-20, compared with the recent
growth of about 8.5% a year
● Full implementation of the proposed IAP would require US$350
billion of development expenditures during 2011-20 (at 2010
constant prices)
7. Table 3: Sectoral Allocation of Proposed Expenditures
for 2011-20 (US$ million at 2010 constant prices)
8. African Development Bank Group
7-Point Action Plan for IAP Implementation
● Early action on the capacity building agenda set out
in the IAP
● Launch of the program of technical studies required
to underpin the early design and preparation of IAP
programs and projects
● Detailed design of programs and projects for each
sector, including financing and procurement
arrangements
● Development of aggregate financing plans for each
infrastructure sector program
● Design and implement programs for development of
domestic business opportunities generated by the
IAP
● Expand programs for development of labor market
skills required for implementation of the IAP
● Expand capacities for oversight and supervision of
program implementation, including design and
launch of M&E programs
9. How Can the Program be Financed?
African Development Bank Group
A detailed financing plan for the
IAP has been drawn up, a summary
of which is given in Table 4.
10. Table 4: Sources of Funding (US$ millions
at 2010 constant prices)
African Development Bank Group
11. Importance of Maintenance
African Development Bank Group
• Lack of routine and periodic maintenance of
infrastructure assets owned by the public
sector has been one of the major factors that
contributed to the decline in the quality of
Nigeria’s basic infrastructure
• Estimates for spending on maintenance are
not available; anecdotal evidence suggests
less than US$1 billion a year – perhaps in
the range of US$500 million a year
• The required level on spending for adequate
maintenance of existing infrastructure
assets is estimated to be in the range of
US$2.6 to US$4.3 billion a year
• The IAP calls for increase in maintenance
spending to about US$16 billion a year by
2020 (at 2010 constant prices)
12. Economic Impact of the Program
African Development Bank Group
• The Main Report includes a detailed set of
projections for the growth of the economy
under three possible scenarios
• A High Growth scenario that reflects full
implementation of the IAP. GDP growth
increases at an average of 7-8% a year in
the decade ahead, driven by growth of 10%
a year in the non-oil economy from 2015
onwards
• A scenario in which there is partial
implementation of the program because of
difficulties in mobilizing the funding
required and in building capacities for
implementation a timely manner
• A third scenario in which the level of
investment in infrastructure remains at a
low of 5% of GDP
13. Can Vision 20:2020 Target be Met?
• Nigeria’s GDP on a Purchasing Power Parity (PPP) basis is
estimated by the World Bank at about US$450 billion in 2012.
On this basis, Nigeria is currently the 30th
largest economy in
the world
• Full implementation of the IAP would result in GDP on a PPP
basis of about US$800 billion in 2020 and US$1,180 billion in
2025 (at 2010 constant prices)
• Nigeria would therefore meet the Vision 20:2020 target for
GDP of US$900 billion by about 2022
• However, GDP per capita would be about US$4,000 by 2020, in
line with the Vision 20:2020 target
14. Table 5: Projection of GDP on a PPP Basis
(In US$ billion at 2010 constant prices)
15. An Agenda for Early Action
● To lay the foundations for a successful IAP in the decade ahead, early
action is required on several fronts
● Implementation arrangements:
● Development of a detailed program for capacity building and launch of
technical studies.
● Introduction of technical and environmental standards for all
infrastructure sectors that are consistent with ISO 9000 standards
● Upgrade and expansion of skills development programs that include
accreditation at recognized international standards
● Financing arrangements:
● Create arrangements for the Sovereign Wealth Fund (SWF) to play a
leading role in financing arrangements for the IAP
● Design a consistent overall game plan for use of export credit financing
from various country sources
● Prepare a detailed program for development of equity and long-term
debt financing from the domestic capital market
21. Support to Agribusiness
Details:
•Public Sector Window Investment
•Instrument: ADF Loan & ADF Grant
•Amount USD 170.31 m
•Agriculture treated as a private
sector led Government enabled
business
•Focus on Rehabilitation of existing
production facilities
•Specific Commodities: Rice, Cassava
& Sorghum
•Restoration of Community
Infrastructure to reduce post harvest
losses
Objectives:
•Employment generation & shared
wealth along commodity value chains
•Increase income of smallholder
farmers & rural entrepreneurs
engaged in production, processing,
storage & marketing of selected
commodities
Summary Components:
•Infrastructure Development
•Commodity Value Chain Development
•Program Management