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Economy

Economy on Reverse Gear over N9trn Abandoned Projects

Although the Federal Government Committee Commissioned to assess the quantum of abandoned projects across the countries is yet to complete its assignment, independent assessors of this national  malaise have estimated that between 12,000to 20,000 high economy impacting projects are currently rotting away in various states of the federation.

While for instance the founder of the Africa Diaspora Research in South Africa, Professor Kole Omotoso, believes the figure could be up to 12,000, a former Minister of Finance and Coordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala puts it at 20,000.

This conflict of numbers prompted the former Speaker, House of Representatives, Aminu Tambuwal to moot a bill to compel Ministries Departments and Agencies (MDAs) to implement national budgets in a manner that could halt disturbing trend of failed and abandoned projects. Tambuwal recalled that the project assessment committee had estimated that over 11,886 projects valued at N7.7 trillion were abandoned after government had spent N2.2 trillion on them while N9 Trillion was required to complete them.

 

So far no one has been prosecuted for these failed projects even a sofnowasnewele- phant projects have continue to spring up.

On assumption of power in 2015, President- dent Muhammadu Buhari promised to audit all projects abandoned by the previous governments and the present one.

Consequently, on Tuesday March 5, 2019, the president appointed Professor Yemi Osinbajo to take stock of both ongoing and abandoned projects by his administration and previous governments.

Ten days later, Osinbajo inaugurated an Audit Committee on Federal Government’s Policies, Programmes and Projects.

At that inauguration event Osinbajo charged the committee to take stock of the administration’s efforts so far and make concrete preparations for its second term

in office which would begin on May 29. Members are the Chief of Staff to the President, Head of Civil Service of the Federation, Minister of Budget and National Planning, Minister of Finance, Minister of Power, Works and Housing, the Attorney General and Minister of Justice with the vice president himself as chairman.

Other members are the Minister of Industry, Trade and Investment, Minister of Transportation, Minister of Agriculture and Rural Development, Minister of Water Resources, Governor, Central Bank of Nigeria (CBN) National Security Adviser, Permanent Secretary, Cabinet Affairs Office and the Deputy Chief of Staff to the President.

The terms of reference of the committee were: “To audit and determine the status of implementation of policies, programmes and projects either inherited or commenced by the outgoing administration

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“To identify and highlight a residue of works and challenges that may militate against their successful implementation.

“To prepare and produce a detailed working document that would guide the incoming cabinet members on the direction of government regarding policies, programmes and projects.

“Co-opt any organization (s) person(s) relevant towards the successful execution of the exercise; and make any other recommendation (s) as may be considered necessary.’’

The vice president also charged them to, in the next few weeks, determine the current status and performance of Federal Government’s projects and programmes relying on submissions made by the various Ministries, Department and Agencies (MDAs).

He said aside such submissions, the committee would also do an objective assessment of experts who were already engaged on similar assessments and would be co-opted to assist in the mission.

Osinbajo said the team would be required to produce a detailed implementation plan based on the Economic Recovery and Growth Plan (ERGP) and several documents including the Next Level document.

He said the committee would also ensure that there was an objective report; very critical analysis and realistic projections.

According to him, the report would constitute clear guideline for each cabinet minister on ensuring that the incoming government had a clear presentation, ministry by ministry on what government needed to do; the challenges to be envisaged and the implementation plan.

However,of all the projects monitored by the committee, the ones in the South East even Nigeria were not only behind schedule, their level of implementation remained poor.

According to the secretary of the south east monitoring committee, Mr Idache Anthony, work at the 3.0 megawatts solar hybrid power plant located at the Nnamdi Azikiwe University, Awka, Anambra State, is below 40 percent completion even though it was awarded in 2017 with a completion period of nine months.

“By the specification of the contract, having assessed the project, I can say that the project is behind schedule because it has nine months duration and if you count nine months from the period of award till now, the project is behind schedule.

“In trying to find out the cause of the delay, the project engineer,Charles Edeh, could not provide information about the project. From what we saw, we cannot lift the project physically from here to Mr President to see.

The information we provide about the project will inform part of our findings that Mr President will virtually ascertain the level of implementation. Now that the site engineer cannot provide information for us we are handicapped so to speak about our report and what we are going back with are:

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1.The project has not been implemented thoroughly.

2. The level of implementation is not impressive

3.Level of implementation compared to the time of award is not impressive. If he had given us information we would have known the percentage.

4.But if you ask me, looking at it physically, I can say that this project is not above 40 per cent completion.

“I did ask if funding was the problem he said that he was not privy to the information about the financial issues of signing
the project” he said, adding that there was a total lack of coordination among the workers.

At the Alex Ekwueme Federal University, Ndufu Alike Ikwo, in Ebonyi State, the chairman of the presidential monitoring committee, Showkubi Olarenwaju also expressed displeasure at the progress of work, several years after it was commissioned. He told Daily Sun on phone that the project was not up to 70 per cent completed. The project, he said, was awarded in 2017 with a completion period of nine months.

Considering the implication of abandoned projects in Nigeria, experts opined that the high rate of abandoned projects is an indication of an unhealthy economy. According to them, Nigeria is a mono-economy that depends totally on oil revenue.

So, the moment oil price plunges, it has a direct impact on infrastructure financing.

In his own submission, a development economist and a consultant to many countries on economies matters, Mr Odilim Enwegbara, suggested that to solve the oil price fluctuation, the government should allow the private sector to take over investment in critical infrastructure.

“If and when government allows the private sector to take over investment in critical infrastructure with a focus on high return on investment (ROI) as the single driving force, many projects wouldn’t end up abandoned.

“If you prioritise projects based on their importance to the country’s economic growth and social inclusiveness, then, it will be difficult for such projects to end up abandoned.

“And the very fact that government’s revenue is mostly dependent on oil, once oil revenue suddenly plunges, then, all the major projects lined up to be funded with oil revenue have to be automatically suspended, and should the revenue crisis continues, those projects over time become abandoned. “Unfortunately, each government comes up with its

own white elephant projects without serious cost benefits going into them and without clearly confirmed funding sources. That is why once the government that initiated the projects leave government office the next government replacing it, without any legally binding obligations toward the inherited projects easily severs funding for those projects, especially in cases where the initiating government has collected its 10 per cent share upfront.

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The high rate of abandoned projects is an indication of an unhealthy economy because if the economy is healthy enough, revenue stream will be growing and projects will easily find funding.

“What needs to be done is to make sure that both national and state-based projects are prioritised based on their importance to growing the economy as well as on the availability funding sources. Second, let the private sector take over these abandoned projects”
he said.

In his own remarks, an erudite professor of capital market and lecturer at Nasarawa State University, Uche Uwaleke, proposed a law to mandate governments to first complete inherited projects before embarking on new ones.

“Abandoned projects leave scars on the economy and represent black holes in our country’s quest for sustainable growth. Whenever a project is abandoned, a lot of funds go down the drain and jobs are lost.

The potential economic benefits which the nation would have derived on completion are lost. From another perspective, the opportunity cost is high arising from the forgone benefit from alternative use of the funds which have now become sunk costs. The situation is made worse if the abandoned project is dollar-denominated since the foreign currency component must have negatively impacted the exchange rate and by extension contributed to exerting inflationary pressure.

“Abandoned projects are products of poor planning and implementation. When a project is initiated based on expected revenue especially from oil sales or even foreign loans that fail to materialise, the result is abandoned projects.

They have also resulted from corruption and misappropriation of funds. Another reason
is political when a new government is unwilling to continue a long term project started by the preceding government. The solution in this wise is to make a law that mandates governments to first complete inherited projects before embarking on new ones. With such a law, efforts of the Buhari administration in completing inherited projects such as the new Abuja Airport terminal and railways deserve commendation” Uwaleke opined.

Isaac Anumihe

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