Protected by Copyscape Unique Content Check
Published: 20th January 2011
Views: N/A


The Recent entrance of Mediterranean Consulting Company {MCC} S.A of Switzerland to acquire up to $20 Billion 25 years notes in form of certificate of deposit {CD’S},bond or medium term notes {MTN} in the infrastructural financing market in Nigeria through public-private partnership is a testimony of the size and economic viability of the infrastructural supply market in Nigeria .

Public-private sector partnership (PPP) is a strategic partnership between government and the private sector that leverages on the strength of both parties in the provision of socio-economic infrastructure for the benefit of all. In this relationship, government is expected to create the right investment climate for the private sector to succeed while the private sectors (investors) are expected to bring to bear their expertise, fund and resource.

With government limited resources and lack of managerial skills, public-private sector partnership presents the best option for government in the provision of infrastructure for her citizen at the best cost obtainable.

Similar relationship exist in the United States of America, Canada and Europe where the government have tapped into the resources of the private sector in the development of their infrastructure and it is on these basis that government especially at the federal and state levels in Nigeria seeks for interested private sector companies or individuals local and international to partner in the provision of infrastructure.

Infrastructural provision is key to the economic development of any nation and if the vision 20:2020 of being amongst the top 20 economies in the world by 2020 is to be achieved, Nigeria most create the right investment climate for private investment to thrive because research as shown that government would not be able to provide the infrastructural needs of the country in a reasonable amount of time.

Nigeria has one of the fastest growing economies in the African continent. The country is located 50 degrees north of the equator covering an area of 923,968 square kilometers. It has boundaries with the following countries/locations: North –Republic of Niger, South –Atlantic Ocean, East-Republic of Cameroon, and west-Republic of Benin.

Nigeria’s time is one hour ahead of the GMT and maintains tropical and sub tropical climatic conditions cutting across dry and rainy seasons.

Currently the population of Nigeria is estimated at about one hundred and forty million {140 million } people with an estimated national population growth rate of 5.7 % per annum and an average economic growth rate of 3.5% per annum in the past five {5} years. This is a very large population if taken in a ration to the entire African continent. The population and economic indices also confirm that the country has a large for any product or investment meant for the continent.

Nigeria operates a presidential system of government. The seat of government is located in Abuja {Federal Capital Territory} and it has thirty six {36} states sub-divided into seven hundred and seventy four {774} local government councils. The major commercial and economic nerve centres are Lagos {The commercial capital of Nigeria}, Abuja, Ibadan, Aba, Kaduna, Kano, Jos, Onitsha, Enugu, Portharcourt and amongst others.

Nigeria’s major export are crude oil, rubber, cocoa, solid mineral, hide and skin, cotton, cassava derivatives, sesame seed, ginger, groundnut etc. The country is the sixth largest exporter of crude oil in the world and has the second largest deposit of natural gas. Currently, over one thousand {1000} oil and gas companies do business in Nigeria.

Nigeria also has one of the highest literacy in the sub Saharan region owning to the over one hundred and forty {140} federal, state and private universities, polythecnics and colleges of education and vocational institutions.

The country has aggressively been developing her tourism potentials. Currently Nigeria boast of over one thousand {1000} 3 star and 5 star hotels scattered within and around her major cities and urban centres.

The transportation sector is also receiving a major boost from the various tiers of government especially since the return of democracy to the country in May, 1999. Current, more than twenty shipping lines do business in Nigeria. The country’s inland water ways is being develop especially with the recent dredging of the river Niger which is one of the most vital in the country. Also over twenty {20} international and fifteen {15} domestic airlines do business in Nigeria.

The banking sector has also been fully developed to service the ever expanding economy. The country has about twenty five {25} commercial banks and over five hundred {500} micro-finance banks in the country hence making easy to source for fund for long term and short developmental projects. The recent establishment of an asset management company {AMC} to buy up toxic loan asset is also a plus to the industry.

Nigeria remains a strong member of various international organization like Organization of Petroleum Exporting Countries {OPEC}, Economic Community of West African States {ECOWAS},African Union {AU} United Nations Organization {UNO} and over eighty one {81} embassies/high commission depicting the level of international acceptance.

Though Nigeria generate lots of funds from the sales of crude oil contributing more than 90 % of the GDP and at such making the country monolithic in nature .It is important to note that about 60% of the counties budget is spent on recurrent expenditure which suggest that little would be left to development the infrastructural needs of the citizens. The situation has created a large for public-private sector partnership in the provision of infrastructure.

The situation is not different in the states and local government with the exception of few, where they are largely dependent on revenue from the federal government and spend more than 60% of the budget on recurrent expenditure leaving them lacking in infrastructure.

Some of the sectors where investment is required include solid mineral development, tourism, sports, power, water supply, transportation, environmental management, Agriculture, housing, road construction, market construction, port operations amongst others.

Government is already reaping the benefits from these partnership as noted the in the first paragraph of the article. The government in partnership with a local firm, Bi-Courtney partnered in the construction of Muritala Mohammed Airport 2 (MMA 2) on a build and transfers basis. The project is now functional and it is said to be one of the best in Africa. Similarly, the government has also concession most of the ports in the country for better service delivery. A state government in partnership with a Turkish firm and all the local government in the state , recently commissioned an asphalt plant where both the state and local government are required to purchase certain quota of the production from the plant for use in the construction of roads in there domain. The state and local are part owners of the plant.

Similar investment opportunities exist in all parts of the country for savvy investors to take advantage of.

Nigeria is the hottest public-private sector partnership (PPP) in the whole of Africa at these moment owning to the size of the market and the infrastructural challenge facing the country and our subsequent article on would expose some of these opportunities in details.

Public-private sector partnership can be anchored on different platforms and some are highlighted below.

1. Design – Build (DB) :

The private sector designs and builds often for a fixed price. The risk of cost overrun is transferred to private sector. Many do not consider DBs to be within the spectrum of PPPs. As a matter of fact, FEC recently has approved as an option, one of its modes of contract awards to fast-track its 2009 budget.

2. Operate and Maintain Contract (O & M) :

Private Operator under contract operates public owned assets for a specified term. But ownership remains with Public entity.

3. Design – Building – Finance – Operate (DBFO)

The private sector designs, finances and constructs a new facility under a long-term lease, and operates the facility during the term of the lease. The Private Partner transfers new facility to the public sector

4. Build – Own- Operate (BOO)

The Private Sector finances, builds, owns and operates a facility or service in perpetuity. The public constraints are stated in the original agreement and through on-going regulatory authority

5. Build – Operate – Transfer (BOT)

A private entity builds, operates and transfers ownership to the Public Sector after some years of operation.

6. Build – Own – Operate – Transfer (BOOT)

A private entity receives a franchise to finance, design, build and operate (and to charge user fees) for a specified period, after which ownership is transferred back to the Public Sector

7. Buy – Build – Operate (BBO)

Transfer of a public asset to a private entity usually under contract that the asset are to be upgraded and operated for a specified period of time Public control is exercised through the contract at the time of transfer.

8. Joint – Venture Operate (JVO) :

Public and Private entities form a joint venture equity and the private

entity operates the entity perpetually.

9. Concessioning :

Operate and Control an existing facility over an agreed term. Usually user fees are charged for these facilities with public control and monitoring.

10. Operation License:

A private operator receives a license of right to operate a public service usually for a specified term. This is often used in projects, solid minerals and oil & Gas Drilling

11. Outsourcing:

Public entities usually give out non-core operations of its activities to private entity to handle. Outsourcing is also termed "Privatization" in the U.S.A

12. Finance Only:

A private entity, usually a financial service company, funds a project directly or uses various mechanisms such as a long-term lease or bond issue.

Government in order to encourage the development of public-private sector partnership in Nigeria established the Infrastructure Concession Regulatory Commission {ICRC} to regulate the concession of government infrastructure to private investors in the country. Government is also tackling power supply which is arguably the single largest problem investor’s face in the country and in fact is inviting interested investors to partner in the generation of power in the country. The target is to produce 6000 megawatts which is the current demand in the country by the end of the year and increase it steadily in line with the vision 20:2020 of the country.

A great deal of investment opportunities exist in public-private sector partnership as the government of Nigeria is creating an enabling environment but the investors is advised to do a country report /business plan to identify these opportunities ,market size, legal considerations and other such requirements before embanking on the project.

You can add your comments to this article by visiting

This article is copyright

Report this article Ask About This Article

More to Explore