The state of public infrastructure in Nigeria leaves much to be desired. A rash of failed projects has left citizens without access to quality roads, functioning utilities, and other public goods. Estimates suggest that 80% of all projects initiated since independence have failed. The drain on resources alone has set the country back decades, not to mention the hindered economic development. In this article, I outline the reasons for this level of failure, look at some specific examples, and offer a way forward that incorporates elements of Web3 regenerative finance (ReFi).


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Returning from Ikom to Calabar last year for Christmas festivities with my family, I couldn't help but feel disappointed by the sorry state of the Calabar-Odukpani highway. The previous Cross River State government, led by our digital governor, Ben Ayade, approved spending 42 billion NGN (approx 32 million USD) to rehabilitate and dualize the highway by constructing 13 spaghetti flyover junctions. Seven years later, the only proof that the project existed was the abandoned machinery littering the project area, and the road remains a potholed mess

My disappointment stemmed from the lost opportunity. Aside from the construction jobs, the highway would’ve been an economic booster for the state, and it would’ve reduced my commute from 4 hours to 1 hour. I started asking myself why. Why are these projects initiated to such fanfare and then abandoned so quickly?

Sadly, I couldn’t just point to corruption as the source of the problem. Infrastructure project failure in Nigeria is a complex issue with deep roots. Quick solutions aren’t easy to find. But something needs to be done or we’ll continue to see failed projects like the Calabar-Odukpani highway take economic opportunities away from citizens. The question is: what? To find an answer, we first need to understand why these projects fail.

Why do projects fail?

In 2023, Nathalie Gazzaneo, Tendai Mvuvu, Matthew Weber, and Rodrigo Pérez-Tejada released a research paper on infrastructure project abandonment in the country. In it, they identified four primary reasons: political transition, poor planning, inadequate budgeting, and lack of accountability. My research suggests that the causes go deeper than those four.

Corruption

Corruption may not be the only reason, but it is the most impactful. It has become an art form at this point. Project managers connive with contractors to short-change the government, or contracts are awarded to companies that either don’t exist or have little to no experience in the respective field. Kickbacks are all too common and, in fact, usually required to secure a contract.

Ripples Nigeria reported a case where the Federal Ministry of Agriculture and Rural Development awarded Mertai Multi-Service Limited a contract worth 14 million NGN (~18,000 USD in November 2021) to install 15 solar street lights in the Angwan Gede community in Abuja. When MAWA Foundation, a local NGO, visited the official address of the contractor, Mertai Multi-Service Limited, no such company was found. Worse still, a visit to the project site showed that nothing had been done despite payments having already been made.

Poor project planning, monitoring, and evaluation

Right behind corruption is poor project planning, monitoring, and evaluation. The Ajaokuta Steel project is the perfect model. Initiated in 1979, the project made significant progress, reaching 98% completion by 1994. However, the initial planning phase did not account for crucial external support infrastructure such as ports and waterways. This oversight led to a halt in work, leaving the project incomplete for over 42 years. Despite the government spending over 8 billion USD on a project initially estimated to cost 650 million USD, the project remains unfinished and has yet to produce a single tonne of steel.

Inadequate financing

Even when projects are planned correctly, securing the necessary financing can be an issue. Originally budgeted at 700 million USD, the government received just 80 million USD from the World Bank for the SURWASH programme. Releasing the remaining US$619.65 million was contingent upon enacting the National Water Resources Bill into law, a condition that has remained unmet. Consequently, the World Bank withheld the outstanding funds. Unless once side budges, the project is history.

Political transition

Projects almost always require more time than a single leadership term (four years in Nigeria) to complete. Paradoxically, incoming leaders prefer initiating new projects rather than finishing those started by their predecessors. Why? Two reasons. First, there is a lot more money available for new projects, so leaders get to keep a larger slice of the national cake for themselves. Second, credit is attributed to the leader who commissioned the project, not the one who finished it. Credit is important in Nigeria because it helps depict leaders as angels and gives them a higher chance of winning future elections.

Eye service

It is widely recognized that certain government officials orchestrate the commissioning of projects to impress visiting higher-ranking government officials—a Potemkin village of sorts. In a rush to meet project completion deadlines, they neglect quality standards and focus only on how the project looks. Unfortunately, these projects rarely function properly after they make their desired impression.

Community alienation

When a project fails to fulfil its promised benefits for a community, it often breeds resentment and resistance among members. A common response is for communities to conduct acts of sabotage. The Niger Delta region is a prime example, where oil exploitation has both generated enormous wealth and caused immense environmental damage. The problem is the region gets all of the latter and none of the former. Pipelines and oil facilities have, therefore, become prime targets for vandalism, resulting in a loss of about 42 billion USD from 2009 to 2019. To the community members, however, vandalism is the only way to disrupt the source of perceived exploitation and draw attention to their plight.

What are the best examples?

The best way to understand the impact of project failure in the country is to look at three critical infrastructure projects that would have directly benefited tens of millions of people. Unfortunately, in each case, the targets were not met, the project became non-functional, and no one has attempted to revive them.

The National Urban Water Sector Reform Project

The main goal of the three-phased NUWSRP1 was to improve access to piped water networks in certain urban areas and enhance the reliability and financial sustainability of urban water utilities in specific states. At project completion, the NUWSRP program costs US$650.5 million. Independent Evaluation Group (IEG) rated the outcomes as moderately unsatisfactory, i.e., they didn’t meet expectations.

Despite the price tag, the project only achieved the following:

  • 284 kilometres of new water pipes.
  • Rehabilitation of 492 kilometres of existing pipes.
  • Annual water production rose from 250 million litres to 865 million.
  • 4.1 million urban dwellers got access to water.

Aside from corruption, frequent political transition doomed this project. Since the utilities depended on state subsidies, each transition put continued financing at risk and turned the project into a short-term political tool with little utility beyond election day. As of 2018, the percentage of Nigerians with access to piped water had decreased to below 2%.

NG-Electricity and Gas Improvement (P106172)

This project aimed to enhance the availability and reliability of gas, thereby boosting power generation in public sector power plants. Additionally, it sought to improve the capacity and efficiency of the power network for transmitting and distributing high-quality electricity to consumers. The project, approved on June 6th, 2009 and concluded on December 31st, 2018, incurred a total cost of more than US$251 million. Once again, the project was rated moderately unsatisfactory by IEG, because upon completion:

  • Additional power generation was only 253 MW against a 898 MW target.
  • Gas supply to public-sector power plants was only 65.6 MMSCFD/month against a 820 MMSCFD/month target.
  • Additional distribution capacity was 539 KVA against a target of 625 KVA.

The major challenge this project faced was inadequate planning. Power sector reforms created two new issues: poor revenue collection and a lack of incentives for distribution companies to increase power supply. Despite knowing about the reforms, the project failed to incorporate them into its plans. The result has been the continuation of woefully inadequate electricity access.

NG-Housing Finance Development (FY14) P131973

This project aimed to increase access to housing finance by deepening Nigeria's primary and secondary mortgage markets. The project, approved on September 26th, 2013, and concluded on December 31st, 2018, incurred a total cost of US$179 million. The IEG gauged the project to be moderately unsatisfactory for the following reasons:

  • The proportion of mortgage debt compared to the country's GDP decreased from 0.58% in 2011 to 0.35% in 2018, meaning that the number of mortgages decreased.
  • The number of adults with an unpaid housing loan dropped from 6.3% in 2014 to 2.6% in 2017.
  • Private money lenders provided only 14,978 new mortgage loans, 70% lower than the goal of 50,000.

This project also suffered from poor planning. Contrary to the plan, the Project Administration Unit at the Central Bank of Nigeria took responsibility for implementation despite the obvious conflicts of interest. Additionally, the Unit lacked the resources to manage the complexity of such a project and was unable to fulfil its fiduciary requirements. The result was heavy delays and a much lower ceiling for impact.

What can we do about it?

The only concept I remember from my first year as a computer science major is the divide-and-conquer approach to tackling an issue. Following that logic, it’s best to split the problem of project failure into two prongs. The first is abandonment before completion, while the second is sustainability after completion.

Tackling abandonment requires removing the Nigerian government from the process because, as alluded to above, the government is not ideal for managing public infrastructure projects. In its place, we need a decentralised entity with built-in corruption guardrails and negligible political transition risk. Sustainability can also benefit from such an approach, but most importantly, it requires a regenerative mindset.

Decentralising evaluation, disbursement, and monitoring

The World Bank has (inadvertently?) become a primary enabler of corruption. It makes loans to the Nigerian government irrespective of the latter’s track record. What other organisation in its right sense would continue to approve loans to a country already owing it US$13.04 billion and with 56,000 abandoned projects in just 64 years. I can’t help but wonder where all that money has gone. The sad reality is that it doesn’t matter whether projects are successfully executed. The faucet will remain open.

I suggest shifting the control of public infrastructure projects from the government to a decentralised entity that would sit between the government, external lenders, and communities. Members of this entity would be a diverse set of individuals with the radical need to see the country prosper. Of course, this will anger the government, but it shouldn’t have a choice because it is no secret that it heavily relies on loans to run the country. This is not the path to economic prosperity.

Such an entity should have four key components:

Shared treasury

All external funds will be held in a treasury controlled by the decentralised entity, so it’s not possible or one or even a handful of bad actors to abscond with them. The only way to access funds would be by a majority vote of the members. It’s also possible to disburse the funds directly to their ultimate recipient rather than through an intermediary like the government.

Proposal scrutiny

When the government submits a loan request, it must also submit a detailed proposal of the project it plans to execute. The entity will then evaluate the proposal based on two core criteria:

  • Financial sustainability - How long will it take the project to make enough profit to pay off the loan used to finance it? The goal is to identify the social, environmental, and economic factors that may negatively affect the project's chances of success.
  • Community interest - Does the community welcome the project or does it have other pressing issues that are more of a priority? This avoids cases of glamour projects and ensures communities get the projects they most need.

After these in-depth investigations, all members will get a comprehensive report containing the findings.

Voting

All proposals must be submitted for voting by members of the decentralised entity. If the proposal is accepted, the first tranche of the loan will be disbursed. The government will also be encouraged to consider any suggestions noted by the members. The remaining tranches of the loan will be disbursed according to project milestones.

For example, if the government needs to compensate for land taken from citizens, the first tranche will be disbursed specifically for this purpose. The government will receive the next tranche once it has been confirmed that landowners have been compensated according to the agreement.

If the proposal is rejected, detailed feedback will be provided which the government must address before submitting the proposal again.

Monitoring

The entity can use various tools, from on-the-ground reporting to satellite imagery, to monitor the project's progress. Any issues can be raised with the government immediately, with the understanding that future tranches depend upon successful resolution. If abandonment is required, measures can be put in place to “punish” the government by making it more difficult to secure future project loans. On the other hand, quick resolution could result in incentives.

Shifting to a regenerative mindset

Regardless of why a project gets abandoned, a common thread is a lack of long-term thinking. There is this belief that short-term financial gain is the goal of public infrastructure projects. What we need is a mindset shift; the idea that a successful project can have a lot more impact than just the thing it was intended to do.

Infrastructure projects in Nigeria always come with a usage fee. Highways and bridges have tolls, piped water and electricity must be paid for, and so on. There is no doubting the financial logic: loan repayment would be a challenge without revenue. What isn’t talked about, in the context of successfully completed projects, is what happens to the revenue once loans are repaid and maintenance and taxes are factored in.

A regenerative mindset suggests that this excess could be reinvested to benefit the public good. Trees could be planted alongside roads, community greenspaces could be developed, and social programs could be initiated. It’s not so far-fetched. I believe that a lot more would be done for the public good if a stable source of revenue was available and we didn’t have to rely directly on the government. ReFi startups would be great candidates to manage these projects.

The way forward

Establishing such a decentralised entity built on Web3 solutions like blockchain and decentralised autonomous organisations (DAOs) is an extremely new concept for Nigeria and one that will not happen overnight. It’s something that needs to develop over time by starting with small, localised projects and then working its way up to larger projects. A track record of success will go a long way to convincing communities and external lenders that this approach is the most impactful. Not surprisingly, the government will be the toughest nut to crack. Two hurdles stand in the way:

Corruption and resistance to change

For most officials, the spoils of corruption motivated them to run for public office in the first place. Attempting to disrupt this carefully orchestrated career path will shake the country's very foundation. There's an old saying that you can't take a man's food source away without a fight. I do not doubt that any attempt at wresting control of the national cake, as it were, would be met with staunch resistance. Others might prefer to keep things as they have always been done to avoid uncertainty.

Limited awareness and understanding

Stakeholders who resist for reasons other than corruption or inertia lack the knowledge of decentralisation and regeneration. Addressing this can make it easier to gain their support against the corrupt flock of politicians. That said, will our governmental officials, largely septuagenarians and octogenarians, be willing to learn something new from the younger generation without feeling insulted? Fostering open dialogue and engagement between the two does offer hope, but it will need to be done carefully and respectfully.

These challenges are not insurmountable, it will just take time. One would hope, for example, that a string of successful public infrastructure projects would be enough to influence an election. It doesn't have to be a federal election, either. A state or even municipal election would be a major step.

The next step is to lay the foundations of this decentralised entity so that it can begin identifying a source of funds, a community in need of public infrastructure, and a local administration willing to invest in change. Nigeria's ReFi community would be a logical place for this idea to take hold.

Conclusion

Nigeria's failure to complete and sustain public infrastructure projects is deeply rooted in corruption, poor planning, inadequate financing, and political instability. Over nearly seven decades, the results speak for themselves: 56,000 abandoned projects, millions of Nigerians suffering from the continued unavailability of basic utilities, and trillions of naira in squandered economic activity.

Nobody should have to spend 21 hours travelling from Cross River to Lagos because a tanker swerved to avoid a steep pothole and flipped. The sad part is that money was available to repair these roads, but the project wasn't carried out for one reason or another. And was it not just last week that normal rainfall washed away a new road in Anambra state one week after it was constructed? Where else does that happen if not in Nigeria?

The percentage of Nigerians suffering from project failures will exponentially increase if nothing is done. One way to address these project failures is to shift project management control to a decentralised entity with safeguards against corruption and political interference. This entity would manage a shared treasury, scrutinise proposals, and ultimately vote on which projects get funded and which don't. But it shouldn't stop there. Nigerian politicians must imbibe the regenerative mindset to prioritise long-term project sustainability and impact. For instance, revenue generated from successful projects could be reinvested into public goods that benefit the surrounding community.

While this approach will face challenges, including entrenched corruption, inertia, and limited awareness, fostering dialogue and gradually implementing small-scale projects can pave the way for reforms at higher levels of government. And if it works, I can only hope that my future offspring will spend 30 minutes travelling from Cross River to Lagos instead of 21 hours.

Footnotes

1 NUWSRP-I concentrated on Kaduna, Enugu, and Ogun states. NUWSRP-II focused on Lagos and Cross River State, while NUWSRP-III (Tier 1) covered Bauchi, Ekiti, and Rivers states. The project provided the selected states with the technical and financial support to reform their water and sanitation sectors. This support involved rehabilitating and expanding water supply infrastructure, strengthening institutional capacities, and initiating public-private partnerships (PPPs) to enhance service delivery. NUWSRP-III (Tier 2) was aimed at supporting sector reform, utility performance improvement, and planning towards promoting the investment-readiness of Anambra, Abia, Bayelsa, Ondo, Benue, Plateau, Gombe, Jigawa, and Kano states.

The views expressed in this article are held by Mr. Morphy and do not necessarily reflect the editorial position of CARBON Copy.