FRANK UKONGA LECTURE SERIES 8 THE IMPERATIVES OF INFRASTRUCTURAL AND REAL SECTOR DEVELOPMENTS TO THE GREATNESS OF NATIONS: FOCUS ON PPP, IGR AND HOW TO RAISE INFRASTRUCTURAL DEVELOPMENTAL FINANCE BY PRINCE FRANK UKONGA

FRANK UKONGA LECTURE SERIES 8

THE IMPERATIVES OF INFRASTRUCTURAL AND REAL SECTOR DEVELOPMENTS TO THE GREATNESS OF NATIONS: FOCUS ON PPP, IGR AND HOW TO RAISE INFRASTRUCTURAL DEVELOPMENTAL FINANCE

BY PRINCE FRANK UKONGA

Civilizations the world over are rated by the levels of their infrastructural development which becomes part of real history and their cultural glories to be mentioned and credited to them as epitome of their greatness. We need to recognize the Egyptian pyramids as part of the Seven Wonders of the World. These gigantic tombs, of Ancient Egyptian kings, has become the symbol of Egypt today. Likewise the old beautiful and exquisite monastery architecture of Russian orthodoxy and their characteristic aesthetic beauty has become the symbol of Russia and even the then soviet Union and will continue to be for a long time to come. The London Bridge that opens up and closes is a great master piece of architecture that was displayed in the recent Olympics and quoted in poetry, songs etal as symbol of the Elizabethan industrial Britain when England ruled the entire world.

 “See Paris and die” was a popular slogan in the sixties and seventies of the previous century and it was due to the spectacular infrastructural facilities they presented to the world as symbol of re awakening and glory of the French civilization. The sky scrappers of New York, Tokyo, Hong kong and that of emerging Beijing the Chinese capital are all symbols of emerging post industrial man with great wealth and glories. The great network of roads well adorned with working street lights, well cut lawns, flowers , trees , attractive billboards etc , bridges , fly overs, rail system of top quality standard , electricity generation and no power failure nor black out 24/7 , the great and beautiful tunnels systems of metro lines, trams, city busses, airports, restaurants, clubs,, hotels and museums, amusement parks, exhibition centers, stadiums, radio , television stations, newspaper publishing, decent roads with side walks, neat, well behaved citizenry and bustling and bobbling avangard of community all total up to make for a great civilization.

In the case of the African continent save for a few cities like Johannesburg, Cairo, Abidjan and perhaps Abuja there is scarcity of modern towns in the entire continent in the context of depicting the emergence of African Tigers due mainly to the poverty of infrastructures most of which are in many cases sub standard, weak and epileptic.

In Nigeria the current condition of infrastructure nationwide is in ruins and decay from roads, to electricity generation, to supply of water, to rail and transportation systems, bridges, airports, parks, museums, hotels, rail system is colonial, no metro system in any city of Nigeria, no tram systems, most gutters are open and with characteristic smell, many parts of our cities are dirty and littered with filth and garbage, road are dark without street lights and many un motor able. The highways are a death trap killing people on daily hourly basis. And the Nigerian case is similar to most African Nation States.

Infrastructural developments are capital intensive projects which need to be planned and financed. Of course virtually all African Nations including Nigeria are in short supply of developmental finance to fund these capital projects of Marshal Plan of Nationwide infrastructural development. And the fiscal budgeting based largely on receipt from most monoculture export of primordial commodities of African Nations cannot finance these projects. How other Nations went about it could be very interesting to study for the purpose of enlightenment and perhaps learning from them. There are two ways of raising developmental finance the world over. Either you use your money or you use somebody else’ money.

1.       Mobilization of Internal Developmental Finance: One either use one’s money to fund infrastructural glories through savings of certain percentage of the GNP for many years set aside for industrial and infrastructural developmental  purposes as in United Kingdom save 15% of their GNP for many years which funded the Industrial revolution. The German, Japanese glories saved up to 22% and even in Japan House wives, and all citizen and students were made to cultivate the saving culture addressed to mobilized developmental finance for the take off of the Japanese industrial and infrastructural glories that we admire today. The Soviet Union saved 25 % of their GNP for the take off of the glories of Russian and the Eastern Europe we admire today. All these were Nations that used their own resources by tasking themselves to harness all the resources available in their countries to fund their real sector as well as their infrastructural development through cultivating a sound saving culture and prudent management of resources across a long period of time. We must realize in Africa that every greatness demand some sort of sacrifice from both the citizens and the leaders. We cannot eat our cake today and have it tomorrow.

2.       Internally Generated Revenue: IGR: The issue of IGR comes in forms of taxes, levies, Tenement rates, water rates, Antennas, radio, masts, TV, bill boards charges, traffic and sundry offences taxes, levis from wood falling etc and these are monies that can accrue to large sums of money if properly harnessed could be used as infrastructural developmental finance both on National and state basis. But then there is the urgent need of adequate legislations from the various Assemblies and National assembly on the issues of IGR as it could be mismanaged by the states and federal levels as well as in the Local Government level. Nigeria and most African Nations are mainly Rental states that earn the bulk of their resources from exports of primary raw materials to the advanced worlds so we have not really become a Taxed state. And for a transition into a Taxed state there must be enabling laws as to how to collect taxes, assessments of properties to be standardized as in some Governors are using it as a means to extort the states and its peoples by slamming arbitrary taxes and levies and tenement rates on the peoples with questionable assessment portfolio. And how these colossal monies collected are spent is still a great point of concern and what legislation on accountability, verifications of how much collected and how it is spent and punitive measures to be in place for executives who mismanage earnings from taxes.

3.       Mobilization of External developmental Finance: External developmental finance can be in form of equity participation from a donor country, FDI-Foreign Direct Investment and lastly by Loan syndications. In the case of equity financing participations many foreign countries are less attracted to that options because of the fragile Nature of African economies and the unstable political climates and the emerging African democracies are weak institutions. So they tend to shy away from investing in infrastructural development that has a longer and indirect way of repaying back. They will rather invest in petroleum explorations, gas explorations, Iron and steel plants, electricity generation and some other public utilities. Highway Airports, city roads, stadia, rail ways, etc cannot attract much of equity financing because of the fact that some of these capital intensive projects fall within the ambit of social spending in strict budgeting and are less profitable.

4.       Similarly the aspects of FDI are in a similar category as some of the investors of FDI category targets investment in the stock Exchange Markets and many have obfuscating agenda. Some FDI investors like George Soros, the founder of the philosophical concept of Reflexivility invest majorly in Hedge funds, is alleged to invest in anticipation of a rise in prices of stocks acquired at normal rates and later starts selling to create panic in the exchange and stock prices begin to fall, just for him to buy more stocks from panic sellers at low prices and hold on for a little while and stocks prices begins to rise again, and he begins to sell at higher rates and sell off all the stocks making a huge profit and he jets out of that economy , destroying it and moving on to another country. So African Nations have to be careful of some FDI investors.

5.       LOANS FROM FINANCIAL SYNDICATIONS/IMF INFRASTRUCTURAL DEVELOPMENTAL FINANCE LOAN: Another category of raising developmental finance is by taking outright loans from a Bank abroad or going to take the world bank/ IMF infrastructural developmental loan and some Nations like Great Britain has made available this year the sum of 100 billion pound to assist developing Nations including Nigeria as an avenue to raising developmental finance for infrastructural purposes through bilateral relations. This is a giant stride for developing countries to make a good use of such facilities but the fear of most citizen and even the donor countries is that experience has shown time and again that such developmental finance loans obtained by African countries develops legs and ends up in private accounts of leaders of these countries or at best mismanaged, thereby putting these countries into great burden of debt trap, slavery, poverty, ruins and decay.

6.       TREASURY BILLS, BONDS, AND OTHER FINANCIAL INSTRUMENTS: A similar type of loan but this could be called soft loan is to raise Treasury bills, bonds and other financial instruments from local or foreign Exchange Markets for a specific date of maturation. And a number of state governments in Nigeria have harnessed this avenue to good use while some only plunge their state and peoples into another burden of indebtedness as in mismanagement of such facilities.

7.       PPP- PRIVATE PUBLIC PARTNERSHIP: Under  the sponsorship of the Military Government, myself Prince Frank Ukonga worked as a consultant to the Director of Logistics and Command of the Air force  Air Commodore Ajibulu Suleimon ,in the 90s to evolve plans of bringing in the private sectors of the Nigerian Federation into the aspects of –PPP-Public Private Partnership and the concept of  build, maintain and turn back public utilities, as the burden was becoming very heavy on the then governments to adequately maintain infrastructural facilities Nationwide due to low prices of Oil that was less than 12 dollars per barrel. It was then we invented the PPP in the context of infrastructural development and maintenances nationwide-i.e roads, Airports, Stadiums, exhibition centers, Highways etc;, which the civilian democracy inherited from the Military. So it must be said clearly that the PPP was invented by the Military government of which I was supportive as a consultant to invent the concepts with top Military brass of the Nigerian federation. So let’s give them the credit. But the present democratic dispensation can re invent the PPP and make it workable for a nationwide infrastructural development. But this will need another round of consultations and fine tuning of the entire programs. In fact most of our assumption then has been overtaken by a down turn in world economy and the resilient economic crisis has affected the premises on which some of the theories could work out for investors in PPP. And that is why Dr Wale Babalakin who is one of the biggest investor in PPP as in MM2- Murtala Mohammed Airport 2 and the Lagos Ibadan Highway concessionaries ceded to his company will continue to have problems as to why it doesn’t seem to tally towards standard profit making concepts.

8.       Yes we are cognizance of the reasons why it will be difficult for Dr Wale Babalakin to succeed in the concessionary and any body that goes in to it, like Lagos State Govenor Raji Fashola as in the Lekkki -Mile 2 road etal may not necessary make the invested money back. And when the then Oceanic Bank was investing and financing infrastructural developments, I Prince Frank Ukonga warned them but they refused to listen to me:, as I have knowledge that the invested funds could be trapped. It is neither the fault of Dr Wale Babalakin nor the fault of Celilia Ibru of Oceanic Bank but the fault came from the theoretical aspects of the enabling R and D that evolved into PPP-which we (i.e. the R & D Team) calculated on over optimistic expectations of global and national economic performances. I must point out quickly that toll gate takings on roads and highways, or Airport levies or gate takings will not be able to bring the investment back so before you go into the PPP you need a sound consultation. And I need to warn the Nigerian Banks to be very careful in giving out loans to infrastructural developments projects except securitized by earnings from taxes or statutory allocations, as it has the potency of ruining them not until more R and D is done as to reflecting the new realities.

9.       THE NEED FOR A NEW R & D: As soon as I can make out some time I will commence another round of R and D to re invent the concept anew addressed to assist all those who may want to invest in PPP as to transforming it into a huge profit making enterprise which will assist the Nigerian Nation to killing so many birds with one stone as in the creation of many million of jobs via PPP, Having state of art infrastructures, improved GDP through great infrastructural facilities built and operated and maintained by the private sectors… in fact the gains to a Nation are endless as it will free up monies being spent on infrastructural development by the government to be channeled to other pressing areas of National and state development etc… I hope to begin the research again very soon for the benefit of the Nigerian state, Nigerian peoples and other African states and the world in generality.

LONG LIVE FEDERAL REPUBLIC OF NIGERIA.

Sign: Prince Frank Ukonga

Governorship Candidate of Edo State 2012 polls