In January 2024, President Bola Ahmed Tinubu reaffirmed his administration's commitment to infrastructure and transportation as pivotal engines for Nigeria's economic growth. To diversify energy sources and enhance regional economic capacity, his government launched key projects such as the AHL and Anoh gas processing plants, the OB3 Gas pipeline, and major roadworks, including the Southern Parkway in the FCT and the Lagos-Calabar coastal highway. These initiatives are integral to boosting connectivity and fostering sustainable development across the country.
However, challenges like budgetary constraints, project delays, lack of maintenance, and bureaucratic inefficiencies contribute to Nigeria’s slow developmental pace. This emphasises the urgent need for practical and effective regulatory frameworks and investments. To address this issue and support development in the sector, the president established the Renewed Hope Infrastructure Development Fund to attract and pool capital for bolstering infrastructure projects across the nation. This fund aims to improve implementation and maintenance processes as well as reduce delays and downtimes caused by bureaucratic bottlenecks. If unresolved, the shortcomings of existing regulatory agencies can still hinder development progress, even with financial investments.
The reformation of regulatory bodies to grant them total independence and control will aid in the formulation and continuity of policies, attract more investments to the sector, and ultimately reach the target of President Tinubu’s administration. Therefore, mirroring some regulators in the UK, such as Ofgem (energy), Ofwat (water), and ORR (rail), which have exhibited consistency, transparency, accountability, and independence, could be instrumental to the development and execution of infrastructure projects in Nigeria.
Shortcomings of Regulatory Agencies in Nigeria
Regulatory agencies are meant to ensure Nigeria’s infrastructure industries operate effectively, but corruption and inefficiency often undermine these efforts. Despite the presence of bodies like the Nigerian Electricity Regulatory Commission (NERC), compliance remains a persistent issue. A glaring example is the electricity distribution companies (DisCos), where practices like overbilling and meter tampering are rampant, enabling employees to exploit customers while regulatory oversight falters. These inappropriate acts by employees show the complacency of Nigeria’s regulatory bodies.
These agencies also face political interference in their operational processes, where policies are manipulated to deprive them of autonomy. This interference often results in biased decisions favouring politically connected individuals over national interests. An example is the Central Bank of Nigeria granting the Dangote refinery a favourable forex allocation rate. Comparatively, the monetary authority of Singapore has operational autonomy to make monetary, regulatory, and supervisory policies without the influence of the Singaporean government.
The duplication and overlapping of regulatory duties, as seen with the Independent Corrupt Practices and Other Related Offences Commission (ICPC) and the Economic and Financial Crimes Commission (EFCC), both anti-corruption agencies with similar scopes and responsibilities, could lead to inconsistencies and inefficiencies, cause delays in execution, and waste financial resources. In 2024, the EFCC and ICPC had a budget of about ₦76 billion and ₦14 billion, respectively.. Merging these agencies will increase efficiency and reduce financial resources spent on both agencies. Curtailing these overlaps is, therefore, very critical in promoting regulatory efficiency and reducing financial waste.
The insufficient financial and human resources of these regulatory agencies hinder their ability to enforce compliance effectively, potentially leading to more societal harm, like Nigeria’s National Agency for Food and Drug Administration and Control (NAFDAC), which had a staff strength of 2000 employees and 95% of its funding internally generated. Its US counterpart, the Food and Drug Administration (FDA), has a budgetary allocation of $8.4 billion and a staff strength of about 19,000 employees in 2023. This challenge experienced by the NAFDAC continually hampers its fight against substandard and counterfeit products.
Lingering delays in completing projects like the Ajaokuta Steel Mill stem from various factors, including the National Steel Council's lack of decision-making autonomy due to political interference, alleged corruption, and policy inconsistencies. Other contributing issues include mismanagement, lack of political will, and an over-reliance on oil revenues. These setbacks have derailed Nigeria’s goal of producing millions of tonnes of steel annually, costing the country $8 billion yearly in steel imports. Budgetary infrastructure constraints and the limited electricity supply cost Nigerian businesses approximately $29 billion annually.
Applied Scenario and Comparative Analysis
Improved service delivery by regulatory agencies could positively affect Nigeria's development and maintenance of infrastructure. Due to rising global population growth and climate change concerns, several governments, like the United Kingdom, have established efficient regulatory agencies to oversee infrastructure industries and their operations. These agencies ensure that their infrastructure can meet the increasing needs and demands.
Ofgem is the UK’s energy regulatory agency responsible for providing an economy free of greenhouse gases at minimal costs. They target the best interests of the consumers by promoting equal access and eradicating unethical practices. They also maintain price stability by fostering fair and healthy market competition. On the other hand, Ofwat is responsible for maintaining competition in the UK water industry. They oversee the fulfilment of the legal responsibilities of companies in the water and sewage industry, while also focusing on continuous water supply and ensuring effective wastewater systems match demands. Ofwat protects the interests of consumers by ensuring that service prices and delivery are equitably met and accessible to all.
ORR, the regulatory agency in charge of the UK’s rail and road functionality and operations, ensures these networks are safe and reasonably priced. These agencies ensure the smooth operation of industries by setting and monitoring standards to ensure compliance.
In 2023, the UK recorded about 1.61 billion passengers using rail services, while Nigeria had about 2 million passengers. Regrettably, this translates to a high revenue loss in this sector, as the Nigerian Railway Corporation recorded a revenue of about 4.4 billion naira compared to 10.3 billion pounds recorded by the ORR for the same year. The Nigerian Railway Corporation is yet to experience its boom in terms of revenue and usage, as it recorded revenues of about 1.7 billion naira and about 1 million passengers in 2020, about 5.7 billion naira and 2.7 million passengers in 2021, and about 4.5 billion naira and 3.2 million passengers in 2022. These low passenger usages and revenues are indicators of several factors, not limited to ineffective management, underinvestment, and lack of trust in the system, which the UK ORR has been able to curb.
So far, the existing UK regulatory framework has successfully devised means to balance consumer protection, efficiency, and transparency. This example shows that the Nigerian government can improve existing regulatory frameworks and enhance infrastructural development. The UK agencies mentioned earlier all have distinctive roles, which limits overlapping responsibilities, which is evident in the tangle of Nigerian agencies and departments. Nigerian regulatory agencies can adopt consumer protection and promote fair competition among the industries they oversee to reduce consumers' exploitation and unfair treatment, as upheld by the ORR. UK regulators are effective at their duties due to their relative autonomy compared to Nigeria, thus limiting obstructive political interference. Adopting this approach may empower Nigerian regulators with the independence to prioritise actions driven by national interest over those influenced by the political or wealthy class. UK regulators are also very particular about monitoring and evidence-based enforcement, which Nigerian regulatory bodies need to improve to increase efficiency and restore public trust.
Potential Benefits of Regulation
Regulation plays a vital role in the economic performance and outcomes of infrastructure industries. The UK Office of Rail and Road created an open access system to promote competition in railway services, give customers more choices, increase connectivity by expanding routes, and lead to market expansion. This steers an increase in the delivery of services, controls prices, and ensures maximisation of customers’ benefits. Regulatory bodies also ensure the safety of passengers and users as this helps instil the consumers’ trust in the system, thereby increasing usage and, ultimately, revenue.
Regulations play a significant part in the success of any country’s infrastructural development. They guide essential processes such as enlisting and training qualified people to undertake the developmental process. This will help address the consequences of weak structural administration caused by a failure to follow due process.
Regulation maintains equilibrium in infrastructure development so consumers can access durable and affordable services even amid monopolistic players. The evolution and advancement of infrastructure depend on any country's regulatory frameworks and bodies, which dictate where investments are made, technologies to adapt, and the overall transformation of infrastructure. As a result, regulation promotes compliance, transparency, and accountability in the infrastructure sector through recurrent monitoring and reviews. These reviews ensure that the operators deliver services efficiently and ascertain that their practices, methods, appliances, etc., are contemporary. As a result, regulation promotes innovation to meet dynamic demands within the industry.
Enhancing Regulatory Reforms
To fully reap the benefits of regulation, there is a pressing need to merge or scrap regulatory agencies with overlapping responsibilities. That way, public funds can be channelled adequately, and transparency and public trust can be restored. In 2019, the Ghanaian parliament merged the National Council for Tertiary Education and the national accreditation body, two regulatory agencies with similar responsibilities, into the Ghana Tertiary Education Commission. This merger eliminated duplication of duties, improved resource allocation, and enhanced the regulator's efficiency. It is also vital to do this and allocate adequate funding necessary for operations, staffing, training, and infrastructure development for various regulatory agencies to improve their regulatory capacity.
These agencies should also run awareness and engagement programs to teach the public about their roles and the importance of compliance for society. This will boost participation, compliance, system trust, and transparency. The UK’s Health and Safety Executive (HSE) launched an Asbestos and You campaign in 2023 to educate those in the construction industry, building material traders, and the broader community of the dangers of using asbestos in homes or offices and reduce related deaths. This is practice should be emulated to give the society reasons why they should comply with standards and procedures.
Recruiting competent staff and offering attractive salary packages will help reduce or eliminate corrupt practices within regulatory agencies. This vital tool of meritocracy, which enables people to enter and grow in the work system due to their high performances and competitive salaries, was employed by Lee Kuan Yew of Singapore in fighting corruption in the 20th century, making Singapore the fifth least corrupt country out of 180 countries.
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