Why the ICRC Act is important for effective PPPs' and Enforcing the Sanctity of Contracts - Udofia

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Tuesday, May 26, 2020 / 9:26 PM / Bukola Akinyele for WebTV / Header Image Credit: Ecographics

 

The Amendment of the Infrastructure Concession Regulatory Commission (ICRC) Act in Nigeria is important for effective 'Public-Private Partnerships-PPPs' and enforcing the "Sanctity of Contracts" which are critical for attracting investments and improving the process of Doing Business in Nigeria said the Managing Associate, Wale Babalakin & Co, Dr. Kubianga Udofia while speaking on WebTV's Economy and Politics Programme.


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Giving his perspective on how Public-Private Partnerships he noted that such financial arrangements have been able to drive investment and economic activities globally, including in Africa and Nigeria, Udofia believed PPPs had come a long way with the commercialization and privatization of government assets.


According to him, data released by ICRC show that between 2008 and 2018 about $8bn in PPP projects had been approved by the federal government with the country currently having about 69 ongoing projects at the federal level. He noted that different projects were going on in different states of the federation.


Looking at Nigeria's infrastructure deficit,  Udofia said it underscored the need for PPP projects and tighter collaboration between the public and private sector using the 2020 budget as a benchmark the amount appropriated for capital projects in the budget was estimated at N312bn.


The legal expert noted that some years ago that the Africa Development Bank (AfDB) reported that Nigeria needed about $300bn to cover its infrastructure deficit. Udofia believed that the funding gaps underscored the importance of government partnering with the private sector to get the necessary funding rather than resort to loans and debt financing for projects.


On the success side of the PPP story in Nigeria, he said there had been some efforts at executing different projects such as the various Airport Terminals, Lekki Concession company projects and several IPPs around the country. Also, in 2006, about 26 port terminals were in concessioned and some of them are doing fairly well, he noted.


Speaking on the challenges on PPP projects, he said they were bogged down by several issues; such as the challenge of federal government agencies respecting agreements and challenges in raising finance. He was of the view that there would have been more progress if some fundamentals were right.


He gave insight into the merit that should be taken into consideration for PPPs in climes like Nigeria, he said first has to do with political issues- the issue of unnecessary interference by a government which doesn't encourage investors to bring in their money and also there is a challenge on a legal issue, a general problem without the congestion of court and also public officers need to be corporative. He said enforcement of court order is a major problem.


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According to him,  the issue of the sanctity of contracts is very important and contracts are the building blocks of any market economy. On the sanctity of contract,  the beauty of government is to draw the framework for a contract, the government must ensure that its agencies when they go into a contract honour their obligations under the contracts. He said, there is a need to get it right, but the government cannot do it alone, he noted that institutions should only sign contracts that we were ready to implement. He observed that experts needed to be engaged from the process of bidding to the stage of signing a contract.


Udofia noted that, the Amendment Act is to empower the current ICRC to be more independent and to act as a disciplinary body in charge of a contract to boost investors' confidence. He was optimistic that the law will be amended soon.


Speaking on insolvency and risk management on how important it is for Nigeria, he commends the government on their good work. According to him, on March 16th the Central Bank of Nigeria (CBN) came out with their first set of palliative by giving out an amount of N50bn targeted at taking care of businesses and households that have been adversely affected by the novel coronavirus pandemic.


Udofia believed that to prevent a deluge of insolvencies which would lead to several companies failing,  resulting in unemployment and reinforcing a recession, the laws needed to be revisited and realigned to current exigencies. He believed that, the Companies and Allied Matters Act (CAMA) could work two things out such as the increase in the threshold for cash-flow insolvency and to suspend section 409 paragraph A completely or use the alternative of a lengthening of the period of demand.


Udofia noted that it was clear that if the ICRC act is amended, there would be independence,  autonomy, empowerment to enforce contracts and ensure  that PPPs worked smoothly and seamlessly.


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