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“Framework for fixing roads in Nigeria” – To Minister Fashola from Mark Essien

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Congratulations for being made minister of road building. You probably already know – there is not enough money to build all the roads in Nigeria. You can only build some roads, and even those roads that you will build, you can only build them in a particular order.

Deciding on the priority of roads is affected by four things:

  1. Political concerns: You cannot favor one Nigerian region strongly over another
  2. Economic concerns: Some roads yield far greater economic output than other roads do
  3. Pricing concerns: Some roads are far more expensive to build/maintain than other roads
  4. Local construction inclusion: You want to incentivize and award contracts to local construction companies

I suggest here a framework for making a priority decision for which roads should be built.

Political Concerns

First of all, every state should submit a list of 100km of Federal Roads in their state. These 100km can be on a single highway, or it can be split into different pieces. The decision should be made in this manner: a voting between senators, representatives and the governor + deputy governor. If those people cannot agree, then the projects stay stalled till they can make a decision.

The reason for the above is simple: the Federal Government does not know what roads are most needed in the states. The senators and governors know. Also, if only the governor is consulted, the roads may tend to be in the region he is particular to – whereas the senators and representatives come from all regions of the state.

Economic Concerns

Once this is done, an analysis of economic impact within the state is to be done for all the road segments so that it’s clear which road has the highest impact. This is done the following way:

Examine what I call the ‘trade potential’ between the two places the roads join. For example, Aba is a big market. Ikot Ekpene is a big town. The Aba market is big enough to absorb all of Ikot Ekpene trade needs, so the trade potential = entire population of Ikot Ekpene. As you move further out, you discount trade potential by distance.

The trade potential is significantly affected by bad roads, so fixing those roads first would do the most to improve GDP.

Pricing and Local Construction Concerns

Now comes the tricky part. We want to build the roads quickly and at very high quality. Some of the highest quality roads in Nigeria were built by Julius Berger in Akwa Ibom State. That is the quality needed all over the country – the problem is that the price will be extremely high, and a single company cannot be the sole contractor for this project.

So I suggest the following: A consortium of major construction companies who are proven to have built roads that have lasted more than 5 years come up with a ‘quality standards’ document that describes the construction materials and process necessary to build a high quality road.

Each of those companies is given 20km of road in each state to start construction. This 20km is paid for by the federal government. The remaining 80km can be bidded for by local construction companies, with preference given to state construction companies. Each company is awarded 20km of roads to build. The financing of the remaining 80km can be done by the state government, in which case the federal government will owe that state for the amount + interest rate + 5% additional. That way, states that have a lot of cash available can finance the quick building of federal infrastructure, while the federal government pays it over time.

Quality control of the road construction is done by the major construction companies – should a sub-contractor be demonstrated to be building the road at sub-standard quality, the major construction company can report this and take over control of that construction process.

It is important that contracts are not given out to people who then further sub-contract it back to companies. So only established construction companies with local capacity to build should be awarded construction contracts.

 

 

Visit Mark Essien’s personal site or his startup

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