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Terhemen Andzenge, LL.M The Presidency, BPE 18 th Nigerian Economic Summit – Dec 3-5, 2012 1.

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Presentation on theme: "Terhemen Andzenge, LL.M The Presidency, BPE 18 th Nigerian Economic Summit – Dec 3-5, 2012 1."— Presentation transcript:

1 Terhemen Andzenge, LL.M The Presidency, BPE 18 th Nigerian Economic Summit – Dec 3-5, 2012 1

2  At independence in 1960 Nigerian economy was wholly controlled by multinational corporations. Infrastructure development was tailored to be a feedstock for the developmental needs of the colonial power, the United Kingdom in the3 factories back home’;  Networks of Rail, Water and Road, post & telecommunications were developed to meet the exportation of cash crops, such as groundnuts, cocoa, cotton and palm products and to the importation of cheap, mass produced consumption goods. Economy consumer oriented  Infrastructure was essentially concentrated in areas that would aid the harvesting of raw materials for export. Development of rail lines, post & phones, roads etc were built around routes that would Aid in the harvesting & easy transportation & shipping of raw materials. 2

3  Considering importance of infrastructure to economic development, the newly independent Government embarked on a massive effort to assert its economic sovereignty by setting up strategic public utilities and provision of infrastructure services  State Owned Enterprises “SOEs” in utilities (gas, water and electricity), transportation (railroads, airlines, ports, buses and communications (telephone, telegram, and postal services), financial services, healthcare delivery, agriculture, hotel, insurance, manufacturing, trading, textiles, and education were set up.  The setting up of SOEs had twin aims: sustainable economic and social development: engine room for economic growth 3

4 $100 billion spent by FGN to establish SOEs between the 70s and 80s to: Control of commanding heights Correction of Market failure Facilitate Regional development Targeted Jobs creation Provision of Social services Balance or replace weak private sector Produce higher investment ratios Transfer technology, management & know-how Generate employment Develop otherwise uneconomic areas or sectors Provide goods and services at lower costs 4

5  Oil was found and money was no longer the problem – the problem as the popular adage goes was “how to be spend it”.  FGN set up SOEs in virtually all the sectors of the economy. Revenue from oil funded their activities.  By the end of the 90s over 600 SOEs existed at the Federal level and over 900 at the state & LG levels 45

6  The SOEs returned 0.5% profit and employed only about 420,000 people;  Accounted for between 30 & 40 per cent of fixed capital investments;  Overall returns in SOEs never exceeded two per cent per annum  Overall over N800 billion invested in SOEs 56

7 1.Corruption and Mismanagement 2.Dependence on treasury funding 3.Poor services, 4.Arrogance/insensitivity 5.Nepotism/Ethnicism 6.Parasitism and Rent Seeking 7.Inequities - reverse of Robin Hood!! 7

8  Dwindling oil revenues,  Massive import bills,  Unsustainable external debts,  Rising recurrent expenditure  Corruption  The global trend of the private sector being the engine room for growth and economic development Govt. decided to rethink the SOEs model 8

9 Government has realized it CANNOT (even if it wants to) fund infrastructure development BUT also realizes that: Infrastructure investment and dev. form the bedrock and catalyst for sustained economic growth and development. Infrastructure dev. creates the enabling environment to stimulate business and industrial activities, thereby enhancing productivity, reduced operational cost, job creation, income generation, wealth creation, poverty reduction, new ventures and business opportunities 9

10  Transportation got N54.83 billion out a budget of N4.6 trillion in 2012. that’s a mere1.2%!!  Nigeria needs conservatively USD 14.2billion (N2,275 trillion per annum over a decade at the Federal Level  States/Local Govt. levels would need USD3.7billion (N592b) annually Who funds the rest????? 10

11 The Global Competitiveness Report 2011–2012 Of the World Economic Forum Ranking with a Benchmark Of 142  2.01 Quality of overall infrastructure.......................................125  2.02 Quality of roads.............................................................120  2.03 Quality of railroad infrastructure......................................104  2.04 Quality of port infrastructure...........................................117  2.05 Quality of air transport infrastructure...............................104  2.07 Quality of electricity supply..............................................139  2.08 Fixed telephone lines/100 pop.........................................134  2.09 Mobile telephone subscriptions/100 pop........... ….............122 1011

12 PSP in infrastructure dev. makes the interests of all in the value chain become non-convergent:  Private Investors: overriding aim is quick recovery of their investments and high profits  Government : Investments were a social service Interested 1112

13  Assurance of recovery of investments  Certainty of reasonable return on investments  Policy consistency  Virile property rights  Viable adjudicatory process  A transparent & stable regulatory regime All the above are encapsulated in one word: New Legal & Regulatory Framework 13

14  To balance the different & conflicting roles of the players in the value chain;  Preventing public monopolies from turning into private monopolies;  Preventing market failures;  Introducing a referee, an umpire in the complex intertwined interests in the value chain;  Promote competition 14

15 Transportation:  Lack of coordination with each sub-sector pulling in its different directions: no inter - modalism – road, rail, marine;  Road alone takes over 95% of human traffic and about the same for cargo;  Existence of huge monopolies in road transportation with no checks;  No private sector investment in the rail mode – absence of legal/regulatory framework; 15

16  NIPOST essentially a cost center with service delivery at zero levels  Private courier coys. takes over the market for both parcels and letters  Option of transiting village/town post offices into ICT/cash centers on the discussion table with CBN and NIPOST BUT framework to encourage PSP no legal/regulatory 16

17  Liberalization and reform without an antitrust regime is like contemplating a without an engine.  There exists huge stifling monopolies in several aspects of the nations' economic life: land transportation, manufacturing (cement, sugar, rice, salt etc) and air transportation  Liberalization means Govt. monopolies are transformed into private entities: there is the need for prevent the rising of private monopolies cartel like behavior such as price fixing, market division, excessive pricing and even abuse of single or collective dominant positions. 17

18 Advantages …… This PSP combination ensures:  ƒShared costs: this will ease the burden of providing, maintaining & expanding infrastructure has simply grown too great to be borne solely by tax payers and government  ƒReduced costs: getting private entrepreneur to provide & maintain infrastructure can often result in lower costs because the private sector’s administrative burdens are fewer than those of Govt.  Accountability  ƒEfficiency: Quick, timely, lean delivery of services 18

19 Railway Bill Roads Reform Bill Inland Waterways Bill Ports & Harbor Bill National Transport Commission Federal Competition & Consumer Protection Bill Pending Infrastructure Bills Postal Reform Bill 19

20  Repeals and re-enacts the Nigerian Railway Corporation Act, 1955;  To provide the appropriate market design and legal framework for the implementation of Government’s reform programme & clearly separate the roles of policy making, regulation and operation;  To provide a platform for the introduction of private sector concessionaires;  To make provision for economic and safety regulation by the National Transport Commission;  To promote competition in the provision of railway services nationwide;  Provide for the compulsory acquisition of land and greenfield developments; and  Introduce the provision of subsidies for public service obligations. 20

21  repeals the National Inland Waterways Authority Act 1997 and establish the Inland Waterways Authority of Nigeria, and locate its operations within the overall national transport sector reform policy with a view to improving efficiency in service delivery;  attracts private sector participation in management, infrastructure and technology development of the inland waterways and thereby reduce cost of transportation and service delivery;  enhance competition;  minimizes the public treasury dependence of inland waterways development;  the regulation of the inland waterways and institution of reforms in an essentially comatose state owing to under-development, poor performance and exclusion of private operators, lack of infrastructure, inadequate funding and non-realisation of sub- sector potential among others. 21

22  To provide an appropriate institutional framework for the ownership, management, operation, development and control of ports and harbours to ensure the integrity, efficiency and safety of the ports based on the principles of accountability, competition, fairness and transparency;  To repeal the Nigerian Ports Authority Act, No 38 of 1999 and re-create same;  To separate the landlord from operations and regulatory functions in ports and harbours;  To promote efficiency in ports operations nationwide & encourage competitive, private investment in port infrastructure,qualitative and cost effective ports services;  To reduce costs to government for provision of ports services;  To promote and safeguard Nigeria's competitiveness and trade objectives. 22

23  to promote the implementation of the national transport policy;  to provide for an economic regulatory framework for the provision of services and supply of goods in the transport sector or regulated transport industry;  to provide a mechanism for monitoring compliance of government agencies and transport operators in the regulated transport industry and provide advice to the Federal Government on matters relating to economic regulation of the regulated transport industry;  to provide for an efficient operation and regulation of the transport sector through the removal of multiple and duplicate regulatory functions by the Federal Government and its Agencies;  to protect the rights and interests of service operators and users within Nigeria; and  to create an enabling environment for private sector participation in the provision of services in the transport sector. 23

24  To promote the implementation of the National Postal Policy;  Establish a regulatory framework for the postal industry in the provision of modern universal, efficient and easily accessible postal services;  Encourage private investments and competition in the postal industry;  Protect the right and interest of service providers and consumers;  Ensure that the needs of the, rural populations, disabled and elderly persons are taken into consideration;  Ensure an efficient management including planning, coordination, allocation and use of scarce national resources in the postal sector; and  Establish the Nigerian Postal Commission with responsibility for the regulation of the postal sector. 24

25  To promote competition & balanced dev. in the Nigerian economy;  To ensure fair trading practices, efficiency, equal opportunities for all players in production, trade and commerce;  To protect & promote welfare consumers and end users of products and services from exploitation, unfair trade practices, price collusion with wider product choices etc.  Repeals the Consumer Protection Council Act and harmonize its provisions into the new bill;  Repeal certain aspects of the Investment and Securities Act & harvests provisions on mergers & acquisitions into new bill;  Expand the space for domestic and foreign competition in a globalised market in Nigeria;  Regulate monopolies, mergers/acquisition and all forms of business combinations; and  Prohibit restrictive business practices which prevent, restrict or distort competition or constitute the abuse of a dominant position of market power in Nigeria. 25

26  Repeal the Federal Roads Maintenance Agency (Establishment, etc) Act No 7 of 2002 and subsequent amendments;  Improve service delivery;  Create improved institutional structures;  Separate policy functions from operations and management;  Ensure improved funding of the sector;  Involve the private sector in the financing and management of the sector;  creates a Road Fund and Road Board for the financing of road assets  Promote the sustainable development and operation of the road sector; and  Facilitate the development of competitive markets and the promotion of enabling environment for the private sector participation in the financing, maintenance and improvement of roads in Nigeria. 26

27  Change is hard to swallow and is naturally resisted  Line ministries fear of loss of territorial  Dominant players fighting to maintain monopoly status  Lack of sustained political will 27

28 Federal Competition & Consumer Protection Commission All work has been concluded and its been readied for FEC approval Postal Reform Bill All work has been concluded and its been readied for FEC approval 28

29  Railway Bill  Inland Waterways Bill  Ports & Harbor Bill  National Transport Commission Stuck in the FMoT essentially over perceived over- reaching role of NTC  Roads Reform Bill Stuck in the FMoW essentially over fight for turf, lose of power, etc. `29

30 Thank you 30

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