Nigeria, the most populous country in Africa, is undergoing rapid urbanisation, with about 54% of the country’s population settling in urban areas. Although this exodus creates economic opportunities, it could harm economic growth. This expansion heightens housing challenges due to the strain on existing infrastructure and increased demand for affordable housing options. Infrastructural development is paramount for economic growth because it promotes economic activity, increases income, and raises the standard of living.
State of Infrastructure in Nigeria
Nigeria’s transport (air, rail, road, and sea) and utility infrastructure (electricity and water) were ranked 130th out of 140 countries, further bolstering the inefficient and insufficient state of the Nigerian infrastructure. The 2020 National Integrated Infrastructure Master Plan estimated $2.3 trillion in investment in the Nigerian infrastructure to bridge the infrastructure gap, with a total estimate of $575 billion on transport and $759 billion on energy.
The housing sector is plagued with several challenges, such as the shortage of suitable housing options to meet demand, insufficient essential services, reduced durability of the available houses due to the usage of substandard materials, and high costs of renting or buying homes due to the high construction costs. All these have contributed to the increasing housing deficit of 28 million. These housing issues are primarily due to weak enforcement in the sector. The effectiveness of planning and development laws and regulations is often hampered by corruption and nepotism within the agencies in authority. This often leads to oversights in the development process, neglect of procedures and standards, and a lack of monitoring of the development in this sector.
The Nigerian road network, recorded as the largest in West Africa, measures about 195,000 km, of which only about 60,000 km are paved. Despite the approval of N383 billion to the Ministry of Works for capital projects in 2023, these roads are fast dilapidating due to the usage of substandard materials, poor maintenance, or neglect.
Power outages are one of the major infrastructural issues plaguing the country, as only about 5000mw is generated, even with an installed capacity of 13,014.14 MW. This can be attributed to insufficient capital for power generation, outdated power plants, a gas supply shortage, and a lack of maintenance. Limited access to markets, constant power outages, high transportation costs, underinvestment, and lack of maintenance could hamper economic productivity, discourage investments, increase business costs, and worsen living standards.
These issues call for a total reformation of these infrastructural sectors, which would involve revising existing laws or creating new laws addressing these modern challenges. The existence of penalties will help curtail the disregard for processes; that way, people have no option but to follow standard protocol and utilise the required materials. These agencies must also intensely sensitise the public about the regulations and the consequences of non-compliance. Most importantly, personnel at the agencies must be equipped to implement these laws. These persistent issues, especially in the power sector, indicate that Nigeria must adopt more sustainable energy sources like solar power, either in totality as in the US or as a support for the existing energy model.
Urban Development Today
Nigeria’s growing urbanisation rate of about 4% has been driven by high population growth, greater economic opportunities in these urban areas, climate and conflict crises, etc. Due to the growing population growth rate of 2.59%, The UN estimated a population of about 400 million in Nigeria by 2050. This will also translate to a higher rural-to-urban migration and is expected to bring about significant benefits such as a boost in economic growth due to increased demand, production, employment, poverty reduction, and improvement in the standard of living. However, these benefits come at a cost, for instance, overcrowding, leading to an increase in the already worrisome housing deficit, traffic congestion, pollution, insecurity, and environmental degradation.
Economic Implications of Infrastructure on Urban Development
A country’s state of infrastructure could affect its economic growth in several ways. Investment in housing, transportation networks, energy, etc, could ease productivity and lessen the cost of doing business, thereby reducing the cost of goods and services. It could also create employment opportunities and aid the movement of goods across different markets, boosting the country's economic growth. For example, the Lagos to Calabar coastal line is expected to encourage trade and investment due to the proximity and network of several markets.
Urbanisation has also brought about an expansion of real estate activities and growth in the construction industry. This has caused a continual demand for accessible and affordable residential and commercial houses. Whether in the form of rents, establishment of businesses, or additional taxes and levies, this urbanisation contributes to the economic growth and development of the affected area. For example, the development of Eko Atlantic City in Lagos is expected to boost investment and economic activities, create employment and business opportunities, and drive economic growth in the state.
The provision of basic infrastructure can be instrumental in industrial development and diversification. For instance, the manufacturing sector is reported to account for an average annual of 10% of Nigeria’s GDP. The infrastructure deficiency was highlighted as one of the major hindrances to the growth of the Nigerian manufacturing sector.
Government Policies and Initiatives
To acknowledge the importance of infrastructure development in upholding urbanisation and aiding economic growth, the Nigerian government developed the National integrated infrastructure master plan (NIIMP) in 2014. This plan aimed to raise the Nigerian infrastructure stock to a minimum of 70% of GDP by 2043. This has brought about adopting models such as public-private partnerships (PPPs) in areas such as transportation, for example, the Port Harcourt to Abuja rail, housing, for example, mass housing schemes across the nation, energy such as new grid systems, etc.
However, like any initiative, several challenges abound, such as corruption, inefficiencies, and insufficient funds. The Presidential Infrastructure Development Fund (PIDF) was established to execute national infrastructural projects and appropriately use the loans acquired, among other duties, to address these challenges and expedite infrastructural development.
There is a great need to prioritise infrastructural development to attain optimal urban development. This will involve a collection of strategic planning, funding, and execution and will be made successful through public-private partnerships (PPPs). Although the PPP model has recorded mixed results, the highlights outweigh the challenges. These challenges, which may include poor evaluation and monitoring, corruption, and nepotism in the awards of these projects, could be addressed by promoting e-procurement platforms. This will help reduce the interface between the agencies in charge of awarding and monitoring these projects and the private bodies, thereby promoting transparency and efficiency. This partnership is essential in helping the government leverage expertise and funds from the private sector and facilitates the execution of development projects. Projects will also be delivered within timely periods, and there will be effective allocation and management of resources.
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