Tuesday, January 29, 2019 4.00PM / Bukola Akinyele for Proshare WebTV
President Muhammadu Buhari, GCFR, on Friday 25 January 2019, signed the Executive Order No. 007 on Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme (“the Scheme”).
This is to cover the period 2019-2029 and is a public-private partnership intervention that enables the Federal Government to leverage private sector capital and efficiency for the construction, refurbishment and maintenance of critical road infrastructure in key economic areas in Nigeria.
Participation in the Scheme is open to every Nigerian company, acting on its own or in concert with other Nigerian companies, and institutional investors (hereafter referred to as “Participants”) wishing to construct or refurbish any road identified and designated by the FGN as an “eligible road” under the Scheme.
This has been described as one of the more significant steps taken by the Buhari administration to attract private capital, as a way of addressing Nigeria’s road infrastructure deficit.
Since the inception of this government, it has earmarked 30% of its budget annually in 2016, 2017, 2018 and 2019 to capital expenditure to drive growth.
With the understanding that the resources and revenue of government will not be able to address the construction, refurbishment and maintenance of the critical road infrastructure, incentivizing the private sector became a viable option.
At the 3rd edition of the Nigeria Economic Summit Group macroeconomic report presentation, Proshare WebTV engaged Dr Tayo Aduloju Senior Fellow, Public Policy and Institutional Development, on his views on the Order.
Aduloju said it was a welcome development and has the potential driving fresh capital inflows.
He believed that implementation of the order was what was important, considering a couple of executive orders that have been signed by the administration.
According to him “We thought by now it would have gotten traction but execution and alignments and synergies between the agencies that need to implement is fundamental. If it doesn’t happen we won’t see the effects”.
On how the Federal Ministry of Budget and Planning hopes to align with the 2019 NESG Macroeconomic report, Dr Aduloju said it was imperative for Nigeria to manage debt to revenue ratios.
This according to him meant that the nation should drive its revenue growth to match its budget debt financing requirements.
He recognized the short timeline for the fiscal policy of the Buhari administration and the Economic Recovery and Growth Plan, ERGP, to kick in. He noted that the current economic framework will lapse by 2020, requiring the country to develop another 10 to 15 year plan.
“We’ve pointed to some difficult scenarios this year because we are all still focused on oil in our planning, which means that shocks to commodity prices could have major adverse impact on the economy in terms of the capacity to finance the budget” he said.