OSOGBO — Minister of Finance, Dr. Ngozi Okonjo-Iweala disclosed weekend that the Federal Government had discovered that the accumulation of contract arrears some of which dated back to ten years actually doubled the initial estimation.
According to her, after compiling the number of on-going and abandoned projects and the development of new ones postponed, the debt yet to be paid by the federal government to contractors amounted to over N500 billion.
Okonjo-Iweala said the initial calculation put the figure in excess of N250 billion, “but we have since then discovered that the contract arrears double this”.
The minister, who delivered a lecture on “Infrastructure and Sustainable Development in Nigeria” noted that this situation can not be good business confidence.
She said that at the beginning of his first term in 1999, President Olusegun Obasanjo inherited an economy that was severely “run down and bore all the characterisitcs of a post-conflict economy.
“I still believe that most Nigerians are yet to appreciate the extent of decay of our institution, infrastructure, system and processes that Mr. President encountered”, she said.
To her, the nation could only assume her leadership potential on the African continent when it addresses its infrastructure deficiencies.
She said: “On a competitive basis, Nigeria ranks lower than most other African countries in terms of the quality and availability of critcal infrastructure believed to be fundermental to economic development”, she told the Peopels Democratic Party (PDP) South-West caucus at its zonal meeting in Ada, Osun State.
“Here the businesses often have to generate their own electricity, have their own boreholes for water and provide security, all of which result in high transaction costs for businesses”.
She cited the 2004 African Competition report by the World Economic Forum (WEF) which described inadequate infrastructural supply as the greatest impediment to doing business in the nation, she said “specifically, infrastructure accounts for 24 per cent of the problems associated with conducting business transactions in Nigeria”.
The Minister said the Obasanjo’s administration attaches high importance to redressing the infrastructure problem, hence the insistence that 65 per cent of the capital expenditure in this year’s budget should go to roads, power, water, education, health and security.
She stated that the government realised it can not do it alone, that was why it developed a number of strategies to achieve the objective.
“Through public- private sector partnership, the government is inviting the private sector to invest in infrastructure. A bill is before the national Assembly to that effect. There is also the privatisation and private sector development as well as the liberalisation and deregulation to foster competition in certain infrastructure sector such as the iol sector.
“Others are the civil service reform, budget and procurement reform and on the fiscal front, improved management of excess crude revenue”.
She said although the challenge against the federal Government was enormous, the various reforms and structural policies of the government had started yeilding results especially in infrastructure improvement and attracting new investment into the nation.
On roads, she said out of the total length of 32,100 kilometres federal highway road network, 26,500 had been rehabilitated, adding that the total projected expenditure of all the three categories was N362.3 billion by 2007.
