AN INFRASTRUCTURE ACTION PLAN FOR

NIGERIA Accelerating Economic Transformation

African Development Bank Group

By Dr. Ousmane Dore, DirectorNigeria Country Office

African Development Bank

Summary of Report Prepared by the African Development Bank for the

Government of Nigeria

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

African Development Bank Group

The Burden of Poor Infrastructure

There is broad agreement that the status of Nigeria’s infrastructure is

unsatisfactory

Table 1: Selected Indicators for Infrastructure for Nigeria and Comparator Countries

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)

Table 2: Expenditure for Infrastructure (US$ million at 2010 constant prices)

Table 3: Sectoral Allocation of Proposed Expenditures for 2011-20 (US$ million at 2010 constant prices)

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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

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.

Table 4: Sources of Funding (US$ millions at 2010 constant prices)

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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)

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

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

Table 5: Projection of GDP on a PPP Basis(In US$ billion at 2010 constant prices)

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

AfDB (CSP) - Country Strategy 2013-2017

Major Pillars: Country Strategy 2013-2017

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Cross cutting Issues: Improved Macroeconomic Governance, Private Sector Development, Gender & Inclusive Green

Growth

Current Public Sector Portfolio

Current Private Sector Portfolio

New Bank Operations

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

How can you get involved?

Contacts