The Minister of Finance, Mrs Kemi Adeosun, gave the assurance at a knowledge sharing forum on PPP organized by her ministry in collaboration with the African Development Bank (AfDB) in Abuja.
According to the minister, the Buhari administration will not only remove the risks but also guarantee funds from private sector and multi-lateral donors go into infrastructure development.
“As far as our financial strategy is concerned we are very committed to PPP. And for us, the way to accelerate it is for the federal government to de-risk the involvement of the private sector and gradually introduce the private sector to PPP.
“Because if we wait for every law to be changed and every regulation to be amended, we really will not get any single project done. So our strategy, and we are going to be starting with a number of transactions early in 2017, is to use the federal guarantee.
“To simply take the risk away from the riskier phases of some of the projects, particularly the construction phase of, for example, road projects which is extremely risky.
“So we will de-risk and guarantee and that will allow private sector money to be crowded in to these transactions.’’
The minister said that though it would not be easy but “its something we must crack because clearly our infrastructure gap is so large that if we spend our entire budget on infrastructure for the next five years we cannot bridge the gap.’’
She said the country must be able to get the project money and the fastest way was for the government to lead and also guarantee the return for investors.
She added that government should take all the risk of using private money and giving the private sector an opportunity of some of the upside as well as the interest.
According to Adeosun the government has already started a very successful pilot project with the affordable housing fund.
She said that pension fund was being deployed to housing while private sector builders were utilizing guaranteed funds from other sources and multi-lateral donors to accomplish the task.
The minister said that as government began to demonstrate actual successful projects the next set of projects with government’s guarantee would be less until it was gradually removed.
She said it would give the private sector more confidence in infrastructure investment as an asset class.
“PPP is the way that we need to go to get government out of the provision of services that it clearly does not have the capacity to provide,’’ she said.
The minister remarked that “PPP is extremely important to our drive to restore and resolve the infrastructure of this country.
“And we have consistently said that it is solely infrastructure that will unlock the productivity of the Nigerian economy and get us out of our current challenges. So anything that advances PPP is extremely important and very welcome.’’
She said that with the presentations at the forum it was very clear that that there was a common agreement to settle a number of issues in order for the PPP to move forward.
The minister expressed regret that there was no major successful PPP at federal level as at the state level.
“It is very significant that we can’t point to a single major PPP project at the federal level; the successes we have had have been at the state level.
“And the question we must ask ourselves is: what is the lesson that we can take from successful states-executed PPP projects and bring up to the federal level. And that is really a challenge for all of us.’’
Adeosun said that at the moment there were respective roles and responsibilities of each government entity engaged in PPP projects.
She said there was also the need for clarification and common agreement between the government infrastructure development agencies.
She mentioned the agencies as the Bureau for Public Enterprises (BPE), Infrastructure Concessioning and Regulatory Commission (ICRC), and the Bureau for Public Procurement.
She also stressed the need to engage the National Assembly on the relevant laws for effective implementation of PPP.
