Bureau Of Public Enterprises Investors’ Webinar In Collaboration With Nigerian Exchange Group & Nigerian Investment Promotion Commission
REMARKS BY HIS EXCELLENCY, PROF. YEMI OSINBAJO, SAN, GCON, VICE PRESIDENT OF THE FEDERAL REPUBLIC OF NIGERIA AT THE BUREAU OF PUBLIC ENTERPRISES, BPE, INVESTORS’ WEBINAR IN COLLABORATION WITH THE NIGERIAN EXCHANGE GROUP AND THE NIGERIAN INVESTMENT PROMOTION COMMISSION ON THE 13TH OF JULY 2021
Let me join everyone in welcoming you to this investors’ seminar, where we hope to showcase the investment opportunities arising from Nigeria’s economic reforms and privatization activities.
I think that many who have observed this current Nigerian government would agree that an article of faith for this government is the importance of mobilizing private capital and participation for improving efficiency and driving economic growth. This clearly explains why we have this collaboration with the Bureau of Public Enterprises (BPE), which as you know is in charge of our sectoral reform programmes with the Nigerian Investment Promotion Commission and the Nigerian Exchange Group to host this seminar as an important platform for drawing attention to investment opportunities for both our local and foreign friends and collaborators.
One thing this webinar will draw attention to is the fact that past sectoral reforms in Nigeria have brought about increased opportunities and extensive economic and social gains. For example, our pension reform, which replaced the old defined benefit scheme with the contributory pension scheme led to the creation of the pension commission (PENCOM) which now has over N12.3 trillion in pension fund assets under its management.
Similarly, the reforms of our telecommunications sector increased the number of telephone lines in the country from about 450,000 in 2001 to currently well over 140 million active telephone lines and 97.9 percent teledensity.
Equally notable is our port sector reform which led to the concession of various terminals, bringing about major investment and transformation of the various port terminals including in terms revenue, employment and operational efficiency.
Then, of course, we are all very familiar with the power sector reform, which resulted in the unbundling of our old Power Holding Company of Nigeria (PHCN) and the privatization of the successor companies.
Now, this has not yielded all of the very excellent results that we are expecting, but I must say that the Federal Government is working with key stakeholders in the sector to address some of the various challenges impeding its growth.
But I think that our experience with the power sector underscores the importance of using the right models in attracting investment, especially in the provision of infrastructure. And what we have seen is that while you are privatizing utilities of the size of our former PHCN, we simply have to be far more intentional in looking out for the right models and the right type of investors and also looking at funding for these investors over an extended period of time.
And these are some of the challenges that we have seen. But I think that it is an excellent lesson and there is so much that we are learning, and clearly, this will impact the way that we approach privatization, especially of government utilities going forward.
Undoubtedly, a major challenge of the Nigerian economy is its limited infrastructure stock and this is something we have spoken about time and time again. It is estimated to be about 35 percent of GDP, which is our infrastructure stock as compared to 70 percent of GDP in peer countries. So, it’s clear that there is a shortfall there, and given the limited resources of government, government alone cannot provide the financial outlays needed to meet the very huge infrastructure deficit there is and the needs of the economy.
So, it is imperative that we revert to the active use of public-private partnerships to promote infrastructural development. This approach itself requires clear and consistent guidelines for public-private partnership arrangements and investor opportunities.
This is why after several years of relative ambiguity, I think that now we are at the point where the government has introduced, by way of a policy circular, rules that clearly stipulates the respective roles and responsibilities of the Bureau of Public Enterprises and the Infrastructure Concession Regulatory Commission (ICRC) with regards to PPP. I am sure that there are several who had complained about the lack of clarity in the roles of these two agencies.
But the policy now is that the BPE would be responsible for the concession of public enterprises and infrastructure that are already listed in the first and second schedules of the Public Enterprises Act. It (the BPE) will also act on behalf of the Federal Government as the counter party on all infrastructure projects being developed on the PPP basis, whilst the ICRC will be the regulatory agency for PPP transactions, with powers to inspect, supervise and monitor the projects and processes in order to ensure compliance to relevant laws, policies, and regulations.
So, I think the clarity brought about by this new framework will give comfort to interested private partners and incentivize their participation in the exciting new opportunities that abound in Nigeria.
An effective demonstration of the PPP model is the success of our tax credit initiative, especially for road construction. Today, several road projects that may have presented funding difficulties for the government have been done under a scheme that allows private entities, especially private entities that are corporate organizations in Nigeria, to build while government forbears on taxes they would have paid to the extent of their financial outlay on the infrastructure. So, what this means is that if a private entity is prepared to build or participate in the building of government infrastructure, such a private entity would get a tax rebate or tax credit for the amount of money spent. Of course, this would have to go through the normal approvals and all that. This has proven to be very successful.
For example, today, the NLNG is building the Bodo-Bonny road and bridge, and this is a huge project, almost N200billion, and it is building it on that tax credit basis. Also, Dangote built the Obajana-Kabba road in Kogi State on that basis and is currently doing the Apapa-Oworonshoki road in Lagos, also on this tax credit basis.
Furthermore, the Federal Government through the Central Bank of Nigeria, the NSIA and the Africa Finance Corporation, among others, are collaborating to establish a N15 trillion infrastructure fund under the auspices of an InfraCo. And I’m sure that from the CBN Governor’s speech a moment ago, we heard a bit about the workings of the InfraCo. This, for us, is a very exciting possibility, and there are so many, and we think that it opens several doors for infrastructure investment in Nigeria.
We believe that given the credibility of the actors – CBN, NSIA, AFC, and the quantum of resources that will be deployed, the InfraCo will make a major contribution to meeting the infrastructural needs of the Nigerian economy, while promoting public-private partnerships.
So, as I close, let me reassure you that the Federal Government of Nigeria is strongly committed to this approach to national economic development and we consider it an important duty to create the enabling environment for the required and much-needed investment input.
We invite all investors from within Nigeria, as well as our foreign partners, financial institutions, and the international investment community to take advantage of the opportunities offered by the Nigerian economy.
So, it is now my very special pleasure and privilege to declare this investors’ seminar open.
Thank you very much.