Pat Utomi, a professor of political economy and management expert, speaks to DAYO ADENUBI on the recent approval of tollgates for some federal roads and the potential impact of the decision on the Nigerian economy
Last week, the Federal Executive Council approved the reintroduction of toll collection on some selected dual carriageways across the country. What are your thoughts on this?
Nigeria is not a place where we often have rational conversations. I speak about this and people are always complaining. The idea to scrap the toll gates in the first place was a very unwise one. I said so at the time and I wrote opinion pieces about it. Not only were they scrapped, the government spent tens of millions of dollars knocking them down. Now, they’ll spend hundreds of millions getting them back up. I’m not sure what point was proved when the tolls were stopped and then the structures bulldozed so they can’t start again.
Now, 23 years later, we realise that we can’t maintain the highways, saying we have to bring back toll roads again, shamelessly. It is not right; it is an unreasonable use of scarce resources in a country where people are so poor, even if the elite live recklessly on public resources. In principle, I have no problem with tolls; they should never have been removed. Secondly, tolls money should not go into the treasury; it should be specific-use tax for maintaining the highways. And there should be a monitoring committee of users of the highway; for example, members of the Nigerian Society of Engineers and the association of drivers that ply that highway, among others. Their business is to make sure that every kobo paid on that highway is used to make sure the highway is maintained.
Based on last week’s announcement, many of the entities exempted from paying tolls are government-controlled; do you think the government is trying to shield itself from responsibility, while imposing an additional tax on a population with shrinking disposable income?
In Nigeria, there is a culture of some people being above the law. In many ways, it is an assault on the rule of law, but they don’t realise it; they think it’s the privilege of power. And we must begin to change these things. Let the government departments budget for their toll payment. Let them buy e-tags so that they won’t be disturbed when blowing their sirens. But the tag immediately makes sure that the tolls are deducted from their payments; if they want special discounts or volume consumption, that is a commercial consideration. But creating this privileged thing is what creates a mess every time, everywhere. And people have an entitlement mentality, because they’re in government, they can do whatever they like. Let them have a budgeting department for their tolls; let them go and buy e-tags and use them to ply the highways.
Some people are worried that they may have to keep paying tolls for a long time due to the nature of the contracts. What’s your take on this and what advice will you give the government in structuring the deals?
In the United States, highways have existed for long. I lived in a small town called Bloomington in Indiana, a few miles away from Indianapolis, the state capital. A fantastic beautiful road that I used to drive on then is still there. But it has been sold by the state government to a bank, not even an American bank, an Australian bank.
This allowed the road to become even more motorable; the bank collects its tolls, makes profit, and everyone is happy. Of course, there are a few moral laws that go to tolling roads. If you’re going to have a toll road, there must be an alternative. The thing is that those who want to go more quickly can pay their toll and go. Those who don’t have money will suffer the slighter indignity of traffic delays on the freeway. These are some of the basic principles that we can use to confront these issues if we act logically.
Public-private partnership is a viable way to fund public infrastructure. But there are fears in some quarters that some of these agreements were not in the interest of the public. What do you have to say about that?
Firstly, we need to understand that lives are riding on these big policies and judgment, and part of the problems we have in Nigeria is because we don’t rigorously engage the subject. When we talk about institutions, I refer to what are called institutions of complex redundancy. The US decision-making process in Congress looks like this: Before taking a decision, the House first has a conversation around it, sends it to the House committee to go and debate it thoroughly. That committee, after some debates, sends it to the sub-committee, which holds public hearings, where experts from around the country come and give their positions.
These congressmen then develop such knowledge about public policymaking. When the policy now comes out of this process of complex redundancy, committees and sub-committees, House, and plenary hearings, it would have been thought through rationally, compared to our own here where people just talk and talk and the next thing we hear is that policies are out. And that’s how we waste billions.
Before the telecoms licensing, it was almost impossible to own a telephone line. There were less than 280,000 telephone lines in the whole of Nigeria, and less than 50,000 or 60,000 Nigerians who had them in the whole country. Now, it’s a matter of choice whether you want it or not. And it was because of open transparent bidding that was nearly sabotaged, thank God for the late Ahmed Joda and Ernest Ndukwe. Ahmed Joda was a friend to President Obasanjo and this enabled him to defy the minister, who wanted to interfere at the last minute to stop that bidding. We might have missed the telecom revolution if not for that timely intervention. When they did that bidding, most of the big telecoms companies around the world did not come, because they didn’t take Nigeria seriously. But those two men enabled the process not to go the Nigerian way, and today, tens of millions of Nigerians are enjoying that benefit. Compare that to electricity that they didn’t do transparently; we are still suffering the consequences.
So, the proof is there. All we have to do is have some rational conversations, but people will throw emotions at you, saying, ‘Oh, they don’t trust the government; they’ll do it opaquely’. You have to force them not to do it that way. Show them examples of the results when they did it wrongly and right, and put pressure on them to do it right; it will benefit everyone.
Something like electricity tariffs always require a rate commission to monitor the rates. And a rate commission is obliged to hold regular town hall meetings to listen to the consumers. If you subscribe to Consolidated Energy in New York for electricity, you know that they’ll have a town hall meeting. What you simply do is if you think they’re overcharging you, you go to the rate commission meeting and raise hell. Bring evidence of why New Jersey has better rates and all. This will affect the next rate review. You just need to allow the voice of the people to hold those who are rendering the services accountable.
There must be accountability. With tolls, there must be alternative roads. No one is saying you can’t get to work. If you think the rates on the Lekki Expressway are too high, wake up at 4am to get to work. The guy who wants to leave home at 7am can pay for the toll and everyone gets to work.
What are the other alternatives for funding infrastructure that you would advise the government to adopt?
Anywhere in the world today, no government budget carries infrastructure. So, you explore financing avenues, and one of the ways to do that infrastructure is through specific use taxes. In the US, there’s a gasoline tax; the tax goes directly to road/highway maintenance. One of my biggest arguments has been that the way to get Nigerians, who don’t pay taxes, is through specific use taxation. In a manner of thinking, a tolled road is some specific use tax. If you commit to maintaining that road, making sure it is in the best of conditions, we will have no problem paying taxes. The problem in our system is that tolls must go to the treasury and some unscrupulous individuals will spend it as they like, then the road is not maintained for where the tolls were paid. As I said, tolls should never go into the treasury.
We live in the age of capital – that means at no time in history has there been an abundance of capital as what we have now. Perhaps now, the leading authority on the subject of capital in the world is a French economist named Thomas Pikketty. He argues in one of his books that capitalism and globalisation have resulted in the accumulation of capital into a few hands, resulting in high inequality. This money is available; why can’t we as a country position ourselves to attract that capital to do what we need, whether it is in infrastructure or industry. Among the ways you can position yourself is by having the kind of enabling laws that make you attractive to an investor.
Nigeria is very disenabling, and a reasonable investor, who is being very honest, won’t want to invest in Nigeria. A new governor can wake up tomorrow and cancel all the Certificates of Occupancy approved by the previous governor where they have spent N10bn on infrastructure, because he is not benefiting from it. Do you think foreigners will see these things and come and invest in such a country? But that is typical in Nigeria, and there is no rule of law, no property rights. Without rule of law or property rights, you can’t attract the kind of capital that is available to do these things. We need a more disciplined political class.
Also, a lot of infrastructure can be developed through instruments like bonds. In the US, a great part of the infrastructure was built through municipal bonds. These bonds help them raise money to fund urban infrastructure. Also, there are notable infrastructure banks, of which Australian banks are leading, because they have a lot of experience developing infrastructure across a vast country. When I travelled to the East Coast of Australia and I met the mining companies there and spoke to them, many of the railroads leading to the mines were built by private capital. They eventually got converted to public railroads, but were originally built by the mining companies through concession agreements.
Imagine we asked Shell, for example, to build a highway leading to areas they worked in but will be open to the public, while they toll those roads and get their money back; it would have saved a lot of inefficiencies currently experienced with the Niger Delta Development Commission. The East-West Road has taken so long and still isn’t completed. But if Shell were told, ‘Build this road from Port Harcourt to Warri as a 12-lane highway and you will get these tax benefits’. They would have built it and the public would have been enjoying it, not the current awarding and re-awarding of contracts that still don’t get done by the NDDC.
Another funding method is to use the ‘Build, operate and own’ method. You just build your own highway and charge tolls for it. People can pay if they want to use the road, and go elsewhere if they don’t have interest. There are so many templates to use in funding infrastructure. Our mindset is only centred around building infrastructure only through the government. We need to change.