Babalakin says Foreign firms lack capital to develop Nigeria’s infrastructure

The Pro-Chancellor of the University of Lagos (UNILAG) Dr. Wale Babalakin (SAN) has said foreign firms lack the “emotional capital” required to develop Nigeria’s infrastructure.

Dr. Babalakin said this at the 60th Anniversary/8th Fellowship Conferment Lecture and Ceremony of the Nigerian Society of Engineers (NSE) in Abuja.

Delivering a lecture titled “Constraints of Implementing Infrastructure Projects through Public Private Partnership (PPP)”, Babalakin urged Nigerian engineers to sit up and insist on “certain parameters and minimum quality of work”, adding that most of the things foreign firms do in Nigeria are things they cannot suggest in their countries.

He explained that no government has enough money to provide for all the needs of its people, noting that private investors must be encouraged to build sustainable projects so that the limited government resources can be used for other areas which are not commercially viable.

“The mindset of the average Nigerian when a Nigerian invests in infrastructure is that he’s taking government money away and that mindset must be corrected. We built the Murtala Muhammed Airport Terminal 2 (MMA2) and we’ve been running at a loss for the past 12 years but to the undiscerning person, who does not know the cost of putting that infrastructure in place, we are making a lot of money”, Babalakin added.

Urging the government to be consistent and respect agreements reached with investors, Babalakin said anytime the government violates the terms of a contract, the investor’s banker panics, his cost of borrowing increases, his marketability reduces and he will have to pass it on to the project.

Giving example of the Victoria Garden City (VGC) in Lagos, Babalakin said the project was initially designed for mid-income earners but owing to incessant challenges from the Lagos State government and the unfriendly environment to the investors, the project cost increased and the houses became unaffordable to mid-income earners. He said the housing crisis in Lagos would have been non-existent if the system was investor-friendly.

On his experience at MMA2, Babalakin said: “As soon as we completed the project, our partner, the Federal Airports Authority of Nigeria (FAAN), started violating the terms of the agreement. It began to run another terminal next door to us, taking away 60% of our traffic, totally disrupting our cash flow and making it extremely difficult for us to meet our obligations on the project.

FAAN created a new terminal, now known as the General Aviation Terminal (GAT). The grantor of a concession is using government money to compete with his concessionaire/private capital for the same traffic. This is an unfair scenario and very discouraging to investor

Credit: Daily Trust