The Future of Public-Private Partnerships in Nigeria

Many questions loom around the  impact  of Public-Private Partnerships (PPPs) on the poor. Here, Zoe Nutter provides an analysis of  the future of PPPs in Nigeria.

 
PPP projects require more substantive evaluation. In Nigeria, investment in the transport and housing sectors should demonstrate a direct impact on the poorest communities – not only the middle- and high-income portions of society. The World Bank Group’s financial support needs to align with its foremost goal of fighting poverty. And data collection and project evaluation measures necessitate improvement. Avenues for growth in Nigeria must involve the entire population, regardless of income.

The PPP label lacks a universally accepted definition. Generally, it involves a wide scope of “intersectoral initiatives”. In line with the purposes of the World Bank Group, which has yet to adapt an explicit definition of the term, PPPs are referred to as either formal or informal – either long-term or short-term – depending on the type of arrangement and the extent of engagement. Informal, short-term projects may join nongovernmental organizations, the private sector and/or government agencies in a shared objective, while formal projects may involve either short-term or long-term private sector engagements for the provisions of specific services or even full privatizations.

Despite inconsistencies in defining the term, the most crucial explanations specify a clear alignment of the government’s service delivery objectives with private investor’s profit objectives – in relation to long-term commercial contracts between municipalities and private businesses. For instance, the Independent Evaluation Group (IEG) insists tha PPPs require the private party to bear significant risk and management responsibility in the provision of public services or assets. Making sense of how PPPs operate helps to explain the principle reasons for their application. In Nigeria, understanding what they are and determining their significance is crucial. PPPs play a significant role in the overall development framework.

 

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IMF/Creative Commons License

 

Nigeria has experienced some of the highest rates of urbanization in Africa. By 2020, the urban population is set to reach 68% of the total population. And this rapid level of growth has put added pressure on the provision of services and infrastructure. For the most part, available statistics support the argument that it is low-income earners who suffer the most. While public funds favor the allocation of housing units for middle- and high-income earners, low-income people in Nigeria “are left to fend for their housing need”. The process of urbanization in conjunction with “poor funding, bureaucracy, and politicisation of public housing programmes” – as well as a variety of additional contributing factors, like that of economic crisis – has resulted in the “proliferation of slums, shanty developments and deteriorating living conditions”[1].

In recent years, PPPs have been put on the agenda to address the housing crisis in Nigeria. This marks a general trend across many African countries. It represents a new approach to the housing provision: a response that does not depend exclusively on the public or private sector – a collaboration among stakeholders in the housing sector. And international institutions, like the World Bank, promote this innovative approach in newly liberalized, developing economies. But there is a caveat: it is still unclear whether PPPs serve the interests of the urban poor. Although this is not necessarily the main objective of private enterprise, it is of critical importance to determine whether PPPs produce a “proven poverty impact” – especially when the Bank Group continues to support them. If PPPs are not contributing to the Bank’s foremost goals – most notably combating poverty and promoting shared prosperity – their approach needs to be revisited.

One of the key issues is scant data. The PPP literature and research as well as the majority of project evaluations are inadequate. Simply, the effect on the poor is negligible. And the IEG’s July 2014 report confirms this worrying conclusion. The assessment revealed that the World Bank’s upstream support is delivered through “broad based and complex” sector reform efforts with low success in achieving their objectives. In this case, how are developing countries like Nigeria supposed to invigorate essential sectors like transport and housing if the indicators of success are highly questionable? Moreover – if the support for PPPs rests on a “highly questionable trickle-down effect assumption”, insisting that economic growth will eventually impact the poor, then more needs to be done in order to spur a substantive managerial response. Among other things, there needs to be more transparency and accountability: for instance, better surveillance of the fiscal management of PPPs, such that public sector liabilities are minimized and the chances for hidden debt runs are avoided. Moving forward, the PPP tradition must evolve.

The potential for PPPs is great. Dual federal and state regimes in Nigeria strive to increase the number of PPP projects in order to stimulate growth. The government aims to consolidate an attractive and encouraging investment environment by reducing the extent of government regulation, promoting strict adherence to the rule of law and preserving the sanctity of contracts. If PPPs are to succeed in not only supporting growth but also improving the conditions of the poorest and most vulnerable portions of society – ensuring that they are not left behind in the pursuit of wealth, both private and public bodies should be bound by this provision.

[1] See Ibem 2011; see Mustapha 2002; see UN-HABITAT 2006d; see Coker et al. 2007; see Daramola & Ibem 2010.

 

Zoe Nutter has a degree in International Studies with a focus on Political Economy from the University of London: Goldsmiths College. She is currently pursuing a masters of law and international development at the University of Sydney. She has worked at Full Fact and the Bretton Woods Project.


The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.

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