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July 27, 2018

Air Nigeria, PPP and the rest of us

Nigeria Air

By Morenike Taire

In the wake of Globalization as a socioeconomic ideal, Nigerians loved to mouth the mantra to the effect that ‘government has no business doing business’.

It sounds like a catchy phrase, one which might have made sense in a certain era when, the world over, government overconfidence had spawned incompetence, which had in turn spawned waste and profligacy. Infrastuctural development had suffered, with the private sector floating to the rescue in fields as diverse as roads, energy and healthcare. In the United Kingdom and other places, prisons were even built.Nigeria Air

Public Private Partnerships, PPPs, entail      agreements between government and a private contractor for the building, financing or operation of infrastructure with the aim of passing on substantial risk to the private sector. They can take different forms, from simply transferring management responsibilities to a private sector firm, right through to integrated contracts that incorporate the design, building, maintenance and operation of the infrastructure.

There are no templates to this, and in terms of results, all PPPs   are not created equal. Essentially, a PPP is meant to fulfill a need, and ought to be designed such that it would do that as closely as possible.

In capitalist societies, PPPs are a dream come true. As far back as in the turn of the twentieth century, men such as Cornelius Vanderbilt, John D. Rockefeller and Andrew Carnegie made their respective fortunes from innovation in infrastructure, in an arrangement which was the precursor to PPPs.

All of these men’s accumulated wealth has lived long after they had died. They have built foundations and universities, which continue to foster learning and knowledge. Their foundations continue to fund learning and research across a variety of fields.

Some of the infrastructure built by these men remain till this day, including the famous Penn station in New York City, which remains an imposing    landmark at more than a hundred years of age.

The trouble with PPPs are many, including, but not limited to, the tendency to give undue advantage to those who have access to capital. Another common Nigerian saying- ‘the rich get richer and the poor get poorer’- is built on the back of arrangements such as this. And since end users of PPP projects are usually also the taxpayers, complexities arise as to the essence of tax when citizens still have to pay to have access to essential services and infrastructure.

In corruption fraught spaces such as Nigeria, it can get even more complicated. Accountability is usually the first casualty, and with trust out of the window, governments then have to deal with the issue of citizens’ lack of conviction or confidence in the processes and outcomes.

As with virtually everything else, Lagos state has been in the forefront in using PPPs to build, manage and maintain infrastructure, using its own Internally Generated Revenues, IGR, as back-up. Under Bola Ahmed Tinubu, that administration got its hands burnt when it sought to bring private electricity to Lagos state via the now defunct Enron. Clearly, private electricity is still in the agenda of the state, which has conducted extensive research on the matter and awaits the opportunity to execute    when the nation’s clearly defective structure allows for such.

On the whole, these arrangements have worked for Lagos state. In fields as diverse as transportation and even law enforcement, PPPs have been engaged with immense success. While the rest of the country is crying for state police, Lagos has already found many alternatives, using private funding to engage and enhance already existing structures. The Ambode administration has even gone as far as engaging primary healthcare with PPP, a move that proves its understanding of the very essence of this most important level of healthcare.

Of course it has not always been peaches and roses, even in Lagos. Public outcry had greeted the tolling of certain highways in the state. Still the state can be a model in terms of how PPP can enhance the total picture, to provide a balance and enhance life for both citizens and government.

This is all the more crucial as the Federal Government proceeds to launch another National carrier, strangely named Air Nigeria. Before this, the FG’s most traditional engagement with PPP had been its Joint Venture, JV, agreements with International Oil Companies. While some of these companies are just merely companies in their own countries, they have been virtually empowered to run ours, thanks to corruption games from our own side of the fence.

It is no wonder Nigerians are not impressed with, and have no faith whatsoever in the Air Nigeria project. Moreso just as in any other capitalist society, fortunes have been made from PPP arrangements in Nigeria, particularly as emanating from fuel importations. The new class of billionaires thus created has however shown no commitment towards enhancing the socioeconomic position of the rest of the country. All that has happened is that the gulf between the rich and the poor has grown even wider.

The Federal Government has a poor history in the engagement of PPP, and we do not need a soothsayer to tell us that the Air Nigeria project has too much going against it, not least of all the opacity surrounding its formation and operations.

If PPP will work in corruption troubled countries of the third world such as ours, we will have create a model unique to our peculiar circumstances. Using the Nigerian Stock Exchange in such a manner that ordinary citizens can buy shares and be part owners of infrastructure they patronize; is one such ways. There are others.