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Moving infrastructure development forward

Interview - September 7, 2012
Upper Reach interviews Kenneth O Okpara, Honourable Commissioner of Economic Planning of Nigeria’s Delta State

Goldman Sachs has classified Nigeria as one of the Next-11, which are the 11 economies with the most promising growth for the future. However there is a big discrepancy between how Nigeria is perceived by the international community, and the reality on the ground. What is the one key thing that the international community should understand about Nigeria today in its current state of development?

Nigeria is wholly dependent on oil right now, but that is not all that we have to offer. We have the population numbers for internal and domestic consumption. We have other resources, including cultivatable land. If you are thinking of diversifying into manufacturing and sourcing the raw materials from agricultural produce in Nigeria, there is a lot of potential for that. Goldman Sachs’s prediction is based on the fact that we will continue to have oil. But we are also looking into Nigeria’s potential beyond oil. We are trying to leverage the oil resources that we are receiving now, especially here in Delta, which is one of the biggest oil-producing states. We want to leverage these resources to diversify our economy so that we are not wholly dependent on oil. Other activities such as manufacturing will create employment and help our State develop.

The government has a lot of faith in the private sector to help develop the manufacturing side and free the economy from oil dependency. Could you please highlight the importance of public-private partnerships (PPPs) in Nigeria’s development?

Wherever you do not have adequate resources to meet development needs, you have to look for a financing structure that will allow you to achieve your aim. The PPP financing structure has been used in developing countries to develop the local economy, it is important because, it not only provides resources, it quickens the pace of development and enhance service delivery, given the involvement of the private sector. Delta State is funding the development of infrastructures in its industrial parks and clusters using PPP.

What do you think will be the key challenges to pushing these projects forward?

There are security challenges that may affect small operations. But those challenges are known to us, and we are implementing mitigating measures that will help us to minimise those risks. We are also lacking adequate infrastructure. We need good roads and energy. But we are going to move everything side by side simultaneously; meaning that we are not going to wait to develop our infrastructure before we attract foreign direct investment. We have on-going projects in the power sector. Delta State is the one of the States in Nigerian to be given a license to generate, transmit, and distribute power. Rather than put it into the national grid, we are going to use it in-state, so we won’t have any issues with power shortages. We will also finance more independent power projects (IPPs) in Delta State through PPPs, this will encourage investors who will be able to carry out their activities smoothly.

Other challenges are good governance, skilled manpower, and the ease with which you can acquire land. However, in Delta State we have the skilled manpower and land. We are currently working on our land registry and allocation system to facilitate that process.

What is Delta State doing to educate the local community so that they understand, and actually start participating?

Education is one thing, but you cannot educate people without empowering them. If you do not create jobs for people, no matter their education, they will become frustrated and cause problems. So we are engaged in capacity building programs as well as community driven development projects with in-built capacity building activities. One of such is being implemented in conjunction with the UN Development Programme (UNDP), a Multipurpose Youth Centre in Egbokodo, Warri. This is for the training of youths and unemployed on vocational skills.

In addition, Delta State is also involved in the micro-credit scheme, which lends money and gives grants to support people coming out of these vocational institutions to start them up. It also helps those who want to work in companies by locating vacancies. This model will accelerate Delta State’s industrialisation by training and building capacity, getting this youth started on their own, or getting into small and medium-sized enterprises (SMEs). We are also being supported through technical assistance and finance by development partners like the World Bank and the Nigerian Bank of Industry.

The World Bank estimates that for every 1% of government funds dedicated to infrastructure development, the government will experience a 1% GDP increase. Do you think the current government funding is sufficient? 

No, it is never sufficient because there are developmental needs all over Nigeria, especially in Delta. People consider us rich because we get the highest allocation from oil, but it is still not adequate to cope with the developmental needs. That is why we are going for FDI and taking a PPP approach to further support infrastructure development. We currently have foreign investors who are interested in developing the infrastructure of the Koko Free Trade Zone, and we are agreeing those terms now. Most of these endeavours are through PPP. If we rely on the current government budget for infrastructure, we would never grow our economy. We need to use the PPP approach and attract FDI to speed up our development.

It is also about the expertise. We do not yet have the expertise to do all forms of development, which is why we need institutions like the World Bank, and companies which are coming to invest, to give us some technical assistance.

Now turning to on-going projects, and the development of the area surrounding Warri Industrial Park, what will be the ownership and on-going management structure?

We have three parks that we consider as our special economic zones; the Koko Free Trade Zone, Warri Industrial Business Park, and the Asaba ICT Park. Koko has 2,300 hectares but Warri is smaller, about 300 hectares. The main attraction of Koko is its location in an oil and gas area, so, it offers unique proposition to investors interested in petrochemical and fertilizer plants. The Nigerian National Petroleum Corporation (NNPC) and some oil companies are also locating a central processing facility in Koko, which would serve as a raw material feed for most of the companies. We have a serious investor from Saudi Arabia, who wants to invest about $10 billion dollars in Koko to manufacture petrochemicals. There is also an Indian company who wants to setup a fertilizer plant in Koko.

On the Warri Industrial Business Park ownership and management structure, it will be an SPV owned by the Government and private sector investors for the development company, and the SPV would be in charge of the management. The state does not want to own it wholly; we would have an equity in the holding company, but not majority. 

The park will be built in four phases, which will allow you to mitigate the financial risks and ensure completion within four years. What do these four phases mean to the overall development of the project?

Breaking the project development into phases is to ensure that activities are properly sequenced with due regards to funding, timing, and achieving the overall development objectives. It also helps to pause and reflect on the design, and tweak where the need arises. Doing it in phases creates opportunity for learning in the process, because the PPP model and this type of park are new in Nigeria.

We want to integrate whatever happens in Warri Industrial Business Park into the state’s overall economy. We do not want there to be a discrepancy between what the park is doing, and other economic activities in the Delta State. For example, Warri has lots of agro-based industries; we need synergies between those agro-based industries, and the manufacturing companies in the park. That is a way to expand the value chain, encourage diversification, and a sustainable economy.

The seaport is very important, because you will be competing with other free zones that already have that facility.

One of Delta State’s comparative advantage is being located in a coastal zone, and having four seaports, namely, Warri, Koko, Sapele, and Burutu. The Warri and Koko seaports will serve the export needs of the Warri Industria Business Park and the Koko Free Trade Zone. 

How will the establishment of Asaba ICT contribute to the overall development of Delta State?

One of the areas through which India was able to grow their economy was through ICT parks like this. We are taking this model from India, where we will have software and hardware development, and train people to specialise in these fields. We would also like to partner with companies abroad to come and invest in the park in true PPP style, such that they would bring in their facilities, and partner with the state government. The state has a very vested interest in developing capacity to ensure that Nigerians are involved in the ICT development process.

One key thing is that Delta State is sitting at the gateway to the eastern Nigeria, you can access states like Anambra, Enugu, Abia, Ebonyi, and Imo, which host many different activities. Whatever we do in terms of ICT, there is going to be a large domestic market to take it. There are currently no parks of this nature in the southeast, and we will take advantage of our position as the first in the market to be able to capitalise on this untapped potential. The Onitsha Market is close by, and attracts people from all over West Africa as a commercial nerve centre. 

What do you think makes a good leader, and who is your inspiration?  

A good leader is one that leads by example, has great sense of humility, integrity, principle, transparency, and accountability. In order for you to inspire confidence and trust, you must earn it through your actions. I love Mahatma Gandhi of India. He is a man who I have followed because he believes in principles and humility. I have learnt from him on how to serve the people; how to be humble in whatever I do and how not to put whatever position I am in today on top of my head, because it is not of your making but of Gods’ and the people who allowed you to be in that position. Mahatma Gandhi’s principle and show of humility is the reason why his family is still relivant in India today. 

How does a leader make their vision clear for people to understand? By continuously bringing in analogies and things you want to do that align with that vision. You also need to have strategic priorities that should be drawn from that vision. Your sector policies must be articulated from the overall vision. As leader of the Economic Planning Ministry, the budget of every ministry in the state must be aligned with the vision of our State Governor, Dr. Emmanuel Uduaghan. We connect the dots between these different sectors and his overall vision.

What would be your final message to the readers of our report in the UK?

The UK has had a long relationship with Nigeria, but I can personally speak to them with a British mind-set, gained during my time at Cambridge University – Judge Business School. Delta State has a unique proposition and offering arising from its main comparative advantage, it sits in an oil and gas location, and has four seaports, hence there are opportunities in petrochemicals, fertilizer, and other allied products. It is also having a vision of Delta beyond oil, this is meant to leverage its resources from oil and gas to diversify its economy into competitive manufacturing and agriculture, hence offering opportunities in manufacturing and Agriculture. There are a lot of opportunities here in Delta State, the UK has a lot of experience in these fields, so it would be smooth sailing.

Even though you have only been here since September 2011, your work has already shown results.

People do not achieve milestones unless they have a pattern of success. I joined Delta State from the World Bank, while I was there, I achieved milestones in Asia and other parts of the world, and I am repeating the same thing here. With the unalloyed support of the Governor of Delta State, His Excellency, Dr. Emmanuel Eweta Uduaghan, and the Delta State House of Assembly, we achieved for the first time in the history of Delta State, the submission of a budget before the year’s end, and got it approved by the House of Assembly in Delta State before the year’s end. This sets a tone for the rest of the year. In Nigeria, the only time you can do infrastructure work is during the dry season between January and April, and October to December. Hence, we were able to commence the budget implementation early in the year and took advantage of the dry season to deliver some infrastructure projects.