Infrastructure: Lessons from Indonesia – Checklist Mag


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Infrastructure: Lessons from Indonesia

Nigeria can learn some valuable lessons from Indonesia. As a net oil importer since 2004, Indonesia enjoys a state budget saving every time international oil prices fall steeply and allow for a massive cut or the abolishment of fuel subsidies. Now that oil prices have collapsed to below US$50 per barrel, the Indonesian government expects to save almost $16 billion throughout this year that can be ploughed into more productive programs, notably poverty alleviation and infrastructure.

Nigeria needs the doubling of investment in infrastructure development in a bid to boost economic growth. Some financial experts suggest that the federal government should seek to boost financing for infrastructure development. These will greatly help, since poor and inadequate infrastructure has long been the biggest barrier to economic growth and competitiveness for Nigeria.

Is there a need to expand the financing abilities of parastatals in building new airports or seaports or expanding the capacities of existing facilities? Yes! This move is rather innovative, strikingly different from the practice in the past decades, which tended to squeeze bigger revenues from oil and gas to bolster budget revenues.

But allocating larger sums of budget funds for infrastructure development is only part of the task. There are other matters attached to infrastructure, such as the capacity to realize more from tax payments. There is still the challenge of getting to grips the possibility of encouraging the masses to pay their taxes in an orderly manner.

Back in February, 2014, President Goodluck Jonathan said the country needs about $2.9tn investment layout to develop infrastructure over the next 30 years. He has achieved a lot during his tenure as the number one man in Nigeria. Non oil exports from 2010 (standing at $2.3 Billion) and subsequent years are ten times what they were in 2000 (which were $200 Million) as a direct result of this administration’s intervention in the Textile Industry and Real Sector.

Africa50 is to be structured as a developmentally-oriented yet commercially operated entity. It will be complementary to and legally independent of existing development finance bodies in Africa.

Secondly, the president made sure the signing into law the Nigerian Oil and Gas Industry Content Development Bill 2010 (Local Content Bill) has increased Local Content in the Oil and Gas sector. But more than anything else, the issue of infrastructure takes precedence. Most notably, the power sector must receive even more attention than it had ever had.

To add to infrastructure success in Africa, there is the provision of Africa50 Fund by AfDB, which is the result of experience and innovation. The vehicle aims at mobilizing private financing to accelerate the speed of infrastructure delivery in Africa, thereby creating a new platform for Africa’s growth. According to the Bank, Africa50 will focus on high-impact national and regional projects in the energy, transport, ICT and water sectors.

A statement from AfDB says that Africa50 is to be structured as a developmentally-oriented yet commercially operated entity. It will be complementary to and legally independent of existing development finance bodies in Africa. Accordingly, the operational decisions will be made by a management team selected solely on technical merit and demonstrated managerial competence.
It seems that with more efforts directed at building a better infrastructure, not just for a single nation but for the continent of Africa, the unilateral goal of several African countries will pay off.

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