Government has no Business in Business

Professor Timothy Olugbenga Nubi spoke to Jude Njoku on why PPP is the best approach  to projects delivery in present day Nigeria.

Why concessions?

A nation is like any family. You can never have all the resources to meet your needs. So, all over the world, modernization brought so much needs and pressure on government. Modernization in terms of the need for roads, housing, railway systems and other infrastructures. Look at the railway system for example, what we had in the 90s is still what we have today. How are nations all over the world able to provide infrastructure? How are they able to deliver housing? The government has money in the purse? No! Government’s business is to create the enabling environment. Government has no business in business; they create the environment for business to thrive. In most parts of the world, government has access to land, they have access to law; they can make laws. They have access to develop capacity but they don’t have access to the funding. The private sector makes money; the private sector is in charge of money making and business. So, PPP is the marriage of the two. The government creates the enabling environment, has access to land and the one that has access to resources brings them together, that is public private partnership, PPP to deliver what people need.

Paternalistic manner

It is done on a commercial basis. That is to say, it is not run in a paternalistic manner like Father Christmas. It is business, so there is efficiency. This way, projects are delivered. There is no way the government can say, I want to go into railways, housing or health; the private sector has to come in to participate. That is the concept of PPP. People have used it all over the world. That is what concession is all about. I remember when I was younger. Every January 1, we used to stay around the television sets to listen to budget, to know which roads the government wants to tar in Ogun State (my state). And immediately after the budget, the bulldozers will move to site. But right now, the government does not have the resources to meet these needs. So, the private sector that has access to funding and technology comes in and these things are provided. That is the spirit and concept of concession.

Best approach to package PPP so that no party feels cheated

There is skill, there is sincerity, there are laws. The government has to come up with laws. There is a PPP Desk in the Ministries of Works and Housing in Lagos State, so that you are not cheated. If PPP is done in a nature where people take advantage, it will not work. That is where the real estate surveyors come in. There must be sound project appraisal to evaluate the viability and feasibility of the project. The returns on investment is placed on the table so that the government knows what this business will bring in. The government will say, if we give you land, that’s what we are going to realise over a period of time and this is how we are going to share it. That is what comes to me and that is what goes to you. The laws are there. It is an investment and nobody goes into an investment without doing proper feasibility and viability studies. That is where the Estate Surveyor and Valuer comes in, to know where you are going. At the University of Lagos, we did a PPP for the students hostel some years back. But because these things were not properly done when it started, there were issues. UNILAG will say I am cheated and the partner will say I am cheated. So, we have learnt our lessons. The terms must be well spelt out, expectations must be well spelt out, everybody’s return must be clearly spelt out so that if it is okay with you, you will go for it. This project will bring N100 million at the end of the year and we will take N10 million out of it, if it is not okay with you, you walk out of the deal but the details must be well spelt out and that is the role of the Estate Surveyor. They play a very critical role in preparing that appraisal. All over the world, the train moving in London, the well constructed roads, is not government money. The London transport is not government, it is private people working with the government to provide these infrastructure and we have a success story with Murtala Mohammed Airport Terminal Two, MM2. We need it for slums developments. Oluwole in Lagos is a good example of how PPP has worked. Oluwole is 177 families. We have so many slums in Lagos. The government working with the people and the private sector, Oluwole has been turned into a beautiful place. The notorious Oluwole was demolished and people were resettled far away and they were happy and they know that they still have a stake in whatever happens there.

Doing business in Lagos, especially in the area of property registration

Those are the things we want to address because every investment is on land and as long as we have not sorted out the land tenure system, the titling, we still have a long way to go. Why is concession not succeeding? You have to go back to our land tenure and land administration system. How do we administer land? How fast do you get titles? How relevant is your title? To get a certificate of occupancy today after paying millions and the state government that gave it to revoke it the following month and you have already used that title to secure funds to do PPP, you are in trouble.

Mystery of capital

So, it is the basis of wealth. That is actually the crux of my presentation today. The mystery of capital, the issues, the land connection and need for us, not all these land reforms that are in place. The need for us to look straight to every state to sort out their land titling system.

Contract breaches and PPP projects

That’s why the laws are there. Look at the Lekki-Epe express way, it succeeded because of the way the contract was packaged. The PPP is sound legal framework. The man entered into a sound legal frame work because he has international experience. With your MoU, you set all your terms. The contract said that at so so time, they would be collecting tolls. When the government could not sort out with the public, for many months government was counting. The terms must be properly spelt out at the beginning before you sign it. There would be no room for manouvering. That man was collecting his money until Lagos was able to sort itself out. 

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