Kadri Obafemi Hamzat Lagos State Honourable Commissioner for Works and Infrastructure Paper for the Nigeria Infrastructure Building Conference How can social infrastructure projects benefit from the PPP approach? June 26th 2014 Your excellencies, distinguished guests PROTOCOLS. It is my pleasure to be here today to provide a perspective on the use of Public Private Partnerships for social infrastructure. As the Lagos State Commissioner for Works and Infrastructure this is a topic that I and my team consider each and every day. It is our job to ensure that the services our citizens receive from their government meet their needs. Let me start by providing an insight into the infrastructure challenge across Africa, before focusing in on Lagos State and how we have approached infrastructure provision and the use of Public Private Partnerships. I will then share a vision for how we might broaden its use to address the needs of our fast growing population and existing infrastructure deficit. INFRASTRUCTURE AND SOCIAL DEVELOPMENT Big infrastructure projects are by their nature, social investments, especially in developing markets, where the provision of basic services is often lagging far behind the needs of fast growing populations. The provision of power, water and transportation infrastructure are often taken for granted in the developed world, but serve an undeniable social purpose in Africa. The electricity that we deliver to rural villages can be the difference between a school student’s ability to do his homework or not. The water we supply dramatically affects the health of those given access to it and the roads, bridges and railways we construct make it easier for people to get to and from work. The jobs that are created by infrastructure projects themselves deliver a social return and we are proud that in Lagos about 423,000 jobs have been created on infrastructure projects over the last 3 years. These are the considerations that we take into account when examining each and every one of the projects we embarked on. INFRASTRUCTURE IN AFRICA and PPP Lagos is not alone in Africa in having to address a vast infrastructure challenge. The World Bank estimates is that Africa faces infrastructure investment deficit annually of US$93 billion for at least a decade. That is far beyond the capacity of African governments to address alone. Alternative sources of finance must be found, wherever we are on the continent and so, while providing a social good, infrastructure projects are increasingly required to also deliver a commercial return to those willing to invest in it as an asset class. One of the most impressive achievements in the infrastructure space over the last decade has been the ability to deliver on projects that attract international investment. De-risking infrastructure investment in Africa, while delivering a strong commercial return means that going forwards, we should be able to attract more and more of the investment we need to bridge the gap. LAGOS and PPP In 1999, following the return to democracy and the election of Asiwaju Bola Tinubu as the Governor of Lagos State, the revenue of the state was certainly not enough to deal with challenges facing the state. Our revenue generating ability was limited and the needs of our citizens immense. It was clear that unless a financial re engineering took place we would neither have the resources, nor the capacity to deliver on what it takes to build the city. I have been lucky enough to serve in both the administrations of the Asiwaju, and his successor the current Executive Governor of Lagos State, Babatunde Raji Fashola and I am proud to have been involved in delivering such a revolution. From less than 700,000 registered tax payers when APC took office we now have over 4.2 million. From a state budget of N69 billion per annum we now have a budget of 497 billion Naira per annum. INSERT ADDITIONAL ACHIEVEMENTS But as we have grown the state budget, so the challenges facing the government have also increased. From a population of 5.9 million in 1999, we now have over 21 million people and our population is believed to be growing at over 6% per annum, that’s ten times faster than New York or Los Angeles. Despite our ability to dramatically increase the state’s revenue generating capacity, our physical infrastructure requirements continue to place significant demands on our balance sheet. We have to be able to invest faster than the state budget allows us to if we are to expedite the delivery of services to the masses. That is why Public Private Partnerships are so important and why we will continue to use them to find new and innovative ways to deliver the services our citizens need and deserve. For us, the concept of PPP goes beyond the simple structure of partnerships between the public and private sectors to reflect the lens through which we assess their potential impact. The first P is for People. All the projects we consider must fulfill the people of Lagos’s needs expeditiously, efficiently and economically. If they do not improve public service delivery, they are not considered. The second P is for Possibilities. Removing the need for the government to use only its own funds we are able to consider a far greater wealth of possible projects and initiatives than we could without. The third P is for performance. For every project, we must set clear benchmarks, milestones and deliverables to audit the performance of the project against the promise. If they do not deliver tangible benefits, they must be held to account. Using PPP for social infrastructure? Classically, the concept of PPP in social infrastructure is about leveraging the capacity and skill of the private sector to enhance the delivery of social services, like education, health, shelter and security. All of which are equally important to the future development and prosperity of Lagos and its people. Many people often misinterpret this as the need to build physical assets, like hospitals and schools. The reality is that it can be much simpler than that. Let me give you a few examples: - As the commercial centre of Nigeria Lagos is home to some of the world’s largest companies as well as our own emerging indigenous private sector with a rapidly growing need for skilled labour. Every private sector leader I meet with is crying out for improvements in the relevance and skill sets of our graduates. We need to revamp and restructure our education curricula with a view to ensuring students acquire the right skills for employment, entrepreneurship and innovation, and we need to provide greater access to technical and vocational training. By doing so with a forward looking understanding of the needs of the private sector (a partnership) we can drastically improve the skills of our young people, and so their ability to secure sustainable employment, but also support even faster economic growth. A better educated workforce will only increase our ability to attract investment. As such, we partnered with Samsung to build an academy that teaches electronics at a practical level INSERT ADDITIONAL EXAMPLES Our vision for Lagos is to create a Mega City of the future. To do that we have to make decisions that show we have a Mega Heart. The social impact of the projects we initiate is the only true rationale for delivering them. God bless, Lagos and God bless Nigeria. Eko oni baje o
Posted on: Fri, 11 Jul 2014 06:25:34 +0000