MDAs have limited capacity to deliver PPPs — Osinbajo
Vice President Yemi Osinbajo said the presence of Private Public Partnership in infrastructure delivery in the country was poor, with Ministries, Departments and Agencies lacking capacity to drive it.
Osinbajo said this at the Knowledge Sharing Forum organized by the Ministry of Finance in collaboration with African Development Bank in Abuja on Thursday.
Represented by the Special Adviser to the President on Economic Matters, Dr. Adeyemi Dipeolu, the Vice President said few PPP projects had been delivered since creation of the Infrastructure Concession Regulatory Commission in 2015.
He said: “As things stand, there is very limited capacity within Ministries, Departments and Agencies to deliver PPP projects.
“It was the minimum MDAs should have in-house staff with requisite skills in financial, legal, technical, procurement and project management areas to be able to deliver on such projects.
“Capacity building efforts, including training and availability of resource materials, would be inevitable.”
Osinbajo said that one tested way to build capacity was learning by doing, which could be achieved by contracting consultants to assist, but in a manner that ensured eventual transfer of knowledge to the public sector.
According to Osinbajo, public servants have to be involved in actual transactions and negotiations, while a key factor for attracting private sector finance is a predictable and enabling policy, legal and institutional environment.
He said that the forum presented another opportunity for a thorough analysis of government’s policy, legal and institutional framework for PPPs.
Osinbajo added that the analysis included assessing whether the current framework provided enough incentive for local and foreign investors alike.
“Nigeria clearly requires a PPP regime that matches its ambitions,” he said.
He, however, wondered if the country had appropriate framework to enable it to use the very large and growing public pension assets of about N5.3 trillion for the provision of infrastructure without putting the assets at risk.
Accordingly, Osinbajo declared that the number of PPP projects that had been concluded in the country so far was quite low.
He said: “This is partly because of unwieldy project appraisal and approval processes.
“We have to find ways to help reduce the timeframe for delivering projects, while still ensuring that only those of very high quality are delivered.
“One obvious solution is improved coordination between the different parties and institutions involved in project delivery.”
Osinbajo said that difficulty in securing financing was a major hindrance to the financing of PPP projects.
He said: “This has been attributed primarily to the projects not being ‘bankable’ and often relying on government guarantees in order to progress to implementation.
“We must use this forum to discuss ways of ensuring that more projects become bankable and that we do not allow a project guarantee-dependent culture take root.”
Osinbajo stressed the need to follow due process and leading international best practice when developing projects.
He also said PPPs must put people first and that it was essential to ensure public participation in the decision making process so that projects reflected the priorities of the populace.
Osinbajo said that paucity of funds was one of the major reasons for looking at PPP opportunities, adding that there were other advantages to be derived.
He gave the advantages to include a more efficient procurement regime, rigorous analysis and market testing of costs as well as more efficient operation and maintenance of infrastructure.
He said that given its significant infrastructure deficit, Nigeria would experience growth if investment was made in the building of roads, bridges, railways, ports, airports, housing, dams, telecommunications facilities and electric power.