Many Nigerians believe the fallacy investing in Infrastructure drives development ; this is a massive problem ,I believe this started with awolowo and his socialist and the idea stuck ,Baba was building cocoa house , nta ,Nigerian house ...big project that offers no economic benefits...how much does cocoa house generate today ?
Runing government is like running a business ...GDP is likened to business revenue ( turn over ) while government revenue is business profit

None economically viable project are like beautification of your office/business premises , people can say this man has best office space , it's pleasing to the eyes but has little or no impact on your business ...tho they are important, a struggling business like don't need beautification , we need revenue and profit ....we owe too much and can't fund our business expenses so we borrow ....but instead to buy more goods we use it to beautify our office

Nigeria don't need rail lines , we dont need second Niger bridge for now !!! our profits can't even pay staffs yet we borrow to repaint our toilet n change toilet sits to world class ones ,does that make sense ?

You need loan to buy more goods to make more profit .. in government it's creation of new tax payers by providing easy and cheap access to credit in areas you have identified we have a comparative advantage

Let's take lagos to Ibadan rail for example...it cost us about 800 billion plus .... employs less than 3000 people ,still needs government funds to run ... addition to GDP almost zero ,net revenue negative

Now imagine same 800 billion given to banks at an interest rate of say 3% banks to give them out at 10% ...each business has 3 years before loan repayment starts ...

Conditions access the loan
you must a Nigerian or lived here constantly for 15 years

You must be a business that has export potential ( your production cost must be less than international price )

Or

You must be a business that want to produce goods we import at a price less or equal to the products landing cost


You must be willing to employ 50 Nigerians minimum pay should be 300k monthly

You can get 2 billion to 10 billion

Let's say average of 6 billion is given out

133 businesses would be created ... employing minimum of 6666 jobs

If those business make an average profit of 2 billion yearly ...Nigerian profit tax is 20% ....that's a guaranteed 53 billion per year

Employee tax is 15% I think ...that's extra 36 billon per year ...that's 89 billion yearly ... remember after 3 years interest and loans payment starts

Say 40% if the business failed

You still get 53 billion in revenue as a government ....this can comfortably cover for the 40% failure of business n debt servicing would be an issue ...GDP would grow by over 2 billion dollars

But no we built rail

I would bee doing a series on this to defend my ideas ...Nigeria must move from this socialist mindset and be more capitalist to grow

The only wrong thing is the inflated cost of Nigeria's infrastructural projects due to corruption, which reduces the ROI cos of the extremely high cost we use to build these infrastructures.

You're seeing things from a very limited scope... You mentioned Cocoa House, since then has there been continuity? Has it been used for what it was meant for? Awolowo was a genuis, we don't have politicians in the same cognitive calibre today. The ones today are touts, cultists and thieves.

When we talk about infrastructure, Nigeria is yet to start. We don't even have stable electricity, no pipe borne water (most home still depend on bore holes which has a significant impact on the environment), roads aren't well maintained, no light rail, trams (at least most are yet to work), even the narrow guage rail has its own issues...

And here you are telling us to slow down...

I wonder what informs your economic perspective, its terribly warped.
The idea of building up infrastructure to encourage growth is not an idea developed by awolowo, its a real life phenomenom that we saw occur in europe and china and now india!

dont trust only my word, actual economists say so: https://blogs.worldbank.org/digital-development/how-does-infrastructure-support-sustainable-growth

techbroX:
The only wrong thing is the inflated cost of Nigeria's infrastructural projects due to corruption, which reduces the ROI cos of the extremely high cost we use to build these infrastructures.

You're seeing things from a very limited scope... You mentioned Cocoa House, since then has there been continuity? Has it been used for what it was meant for? Awolowo was a genuis, we don't have politicians in the same cognitive calibre today. The ones today are touts, cultists and thieves.

When we talk about infrastructure, Nigeria is yet to start. We don't even have stable electricity, no pipe borne water (most home still depend on bore holes which has a significant impact on the environment), roads aren't well maintained, no light rail, trams (at least most are yet to work), even the narrow guage rail has its own issues...

And here you are telling us to slow down...

What exactly can be done with cocoa house ...tell me how oyo can generate money from cocoa house please I would wait

Even if u reduce rail cost rail ways are never profitable ,Nigeria doesn't need any project that can't sustain its self and raise more revenue to pay off its loan

techbroX:
The only wrong thing is the inflated cost of Nigeria's infrastructural projects due to corruption, which reduces the ROI cos of the extremely high cost we use to build these infrastructures.

You're seeing things from a very limited scope... You mentioned Cocoa House, since then has there been continuity? Has it been used for what it was meant for? Awolowo was a genuis, we don't have politicians in the same cognitive calibre today. The ones today are touts, cultists and thieves.

When we talk about infrastructure, Nigeria is yet to start. We don't even have stable electricity, no pipe borne water (most home still depend on bore holes which has a significant impact on the environment), roads aren't well maintained, no light rail, trams (at least most are yet to work), even the narrow guage rail has its own issues...

And here you are telling us to slow down...

Why not invest on stable electricity instead of rail?

Maazieze:
I wonder what informs your economic perspective, its terribly warped.
The idea of building up infrastructure to encourage growth is not an idea developed by awolowo, its a real life phenomenom that we saw occur in europe and china and now india!

dont trust only my word, actual economists say so: https://blogs.worldbank.org/digital-development/how-does-infrastructure-support-sustainable-growth

What's informed my idea ...can't you see the numbers ? Did I lie ?

Between rail and providing access to credit which would yield more economic development


To support sustained economic growth yes infrastructure is needed but to kick start economic growth human capital development and access to credit are the first line of actions especially when capital is limited


I only said awolowo is the first prominent Nigeria to introduce that to Nigeria

In a capitalist economy the northerners won't be able to compete.
They also need some money to keep up.

Capitalism doesn't favour the poor and less educated.
Lastly infrastructure gives employment to people. I guess that was what Awolowo was trying to do.

It worked out during that time

manutdrichie:


Why not invest on stable electricity instead of rail?

Well, that's a question for the government. At the same time, we need both. We need rail infrastructure to transport heavy goods and masses and decongest the roads, electricity cannot do that.

We could prioritize so we can develop like 2-3 major infrastructure within an 8-year tenure, but when we have greedy politicians who love to do white elephant projects just to loot money, they would frustrate such plans. This is why corruption is Nigeria's biggest enemy.

manutdrichie:


Why not invest on stable electricity instead of rail?

You don't need electricity it's not a a factor businesses consider

Generating electricity in Nigeria is already cheap or every business ...I personally run a factory that has never been contacted to NEPA n never will yet power accounts for less than 5% of my cost of production

Power is not important for now we are too broke for that

techbroX:


Well, that's a question for the government. At the same time, we need both. We need rail infrastructure to transport heavy goods and masses and decongest the roads,
and electricity cannot do that.

We could prioritize so we can develop like 2-3 major infrastructure within an 8-year tenure, but when we have greedy politicians who love to do white elephant projects just to loot money, they would frustrate such plans. This is why corruption is Nigeria's biggest enemy.

You don't need rail to transport anything for now it's not important oga ... people who import goods which infrastructure do they use to distribute ?

mrvitalis:

You don't need rail to transport anything for now it's not important oga ... people who import goods which infrastructure do they use to distribute ?

Trucks. I believe we should have longer trucks

techbroX:


Well, that's a question for the government. At the same time, we need both. We need rail infrastructure to transport heavy goods and masses and decongest the roads,
and electricity cannot do that.

We could prioritize so we can develop like 2-3 major infrastructure within an 8-year tenure, but when we have greedy politicians who love to do white elephant projects just to loot money, they would frustrate such plans. This is why corruption is Nigeria's biggest enemy.

Name one infrastructure that can pay for itself

Instead provide that more at get low interest to banks so they can loan it to busines cheaper

malcom1X:
In a capitalist economy the northerners won't be able to compete.
They also need some money to keep up.

Capitalism doesn't favour the poor and less educated.
Lastly infrastructure gives employment to people. I guess that was what Awolowo was trying to do.

It worked out during that time

And you think babe feeding the poor would make them rich ? Capitalisms carters for the poor and uneducated ...capitalist need work force remember

malcom1X:


Trucks. I believe we should have longer trucks

If importers can move goods without rails then we don't need rails to move local goods ...that's my point

Nigeria needs to only do the most important thing that would create more revenue sooner rather than later ...we don't have money

mrvitalis:

What exactly can be done with cocoa house ...tell me how oyo can generate money from cocoa house please I would wait

Even if u reduce rail cost rail ways are never profitable ,Nigeria doesn't need any project that can't sustain its self and raise more revenue to pay off its loan

Well, to answer that, we'd have to go back to the reason it was created. To the best of my knowledge, it was an urban project meant to kickstart a new wave of development in Ibadan and also to promote tourism, being the tallest building in Nigeria and across West Africa back then.

Successive governments and the military frustrated efforts to build on such infrastructure and convert it to a money making machine and that's why it seems such an edifice went to waste.

Everything in governance is interconnected, if one side is faulty, it would affect another, then another... Military coups dealt a tough blow on Nigeria's development at a time when our democracy would have been perfect.

But the question here should be how Cocoa House was built with Cocoa proceeds (agriculture) and now, it seems impossible? Doesn't that show that we are underutilizing our resources, the biggest being arable lands for Agriculture?

Until we map out a clear regional resource utilization and maximization plan, Nigeria may not achieve certain things.

mrvitalis:

Name one infrastructure that can pay for itself

Instead provide that more at get low interest to banks so they can loan it to busines cheaper

You're just asking random questions... Bro. 🙄

Critical and viable infrastructures drives economic growth and development. Power, technology, transportation, health, education, and even defence etc all require infrastructures to actively function in their regard. Without all these developments, the economy will literally crumble. Now the question here is; how economically viable are your infrastructures? Because the level of viability determine the level of relevant input to the economy and development side by side.

mrvitalis:

You don't need rail to transport anything for now it's not important oga ... people who import goods which infrastructure do they use to distribute ?

You've written according to the limits of your understanding and knowledge, I don't blame you for that. ✌🏾

techbroX:


You've written according to the limits of your understanding and knowledge, I don't blame you for that. ✌🏾

Maybe your can teach me by sharing your superior argument ...I and thousands who would read this would be counting on you

techbroX:


Well, to answer that, we'd have to go back to the reason it was created. To the best of my knowledge, it was an urban project meant to kickstart a new wave of development in Ibadan and also to promote tourism, being the tallest building in Nigeria and across West Africa back then.

Successive governments and the military frustrated efforts to build on such infrastructure and convert it to a money making machine and that's why it seems such an edifice went to waste.

Everything in governance is interconnected, if one side is faulty, it would affect another, then another... Military coups dealt a tough blow on Nigeria's development at a time when our democracy would have been perfect.

But the question here should be how Cocoa House was built with Cocoa proceeds (agriculture) and now, it seems impossible? Doesn't that show that we are underutilizing our resources, the biggest being arable lands for Agriculture?

Until we map out a clear regional resource utilization and maximization plan, Nigeria may not achieve certain things.

So you accept cocoa house never had any economic potential it was just a feel good fancy project ?

It was built with revenue from cocoa ...fine

Did building cocoa house improve cocoa production ? Would that money not have been better used by giving cocoa farmers as loans to expand production to increase revenue ?

YouandiAllofus:
Critical and viable infrastructures drives economic growth and development. Power, technology, transportation, health, education, and even defence etc all require infrastructures to actively function in their regard. Without all these developments, the economy will literally crumble. Now the question here is; how economically viable are your infrastructures? Because the level of viability determine the level of relevant input to the economy and development side by side.

Drive economic growth ,yes
Kick start economic growth more than access to credit and human capital development? No

That's my point ....if you have limited funds like Nigeria which should you do first

Awolowo built industrial estates in Lagos. Today, industrial activities in those estates contributes hundreds of billions to Nigeria 's GDP.

He built roads, residential estates, schools, hospitals etc. These are all infrastructure and they have contributed massively and some are still contributing to Nigeria 's economic development today.

Whether current generation know what to do with Cocoa House is a matter for them. And do you think all the tall buildings you see in New York, Hong Kong, London are utilised to their full potential. The answer is no. Yet, more are still being built in those locations.

I agree with your base proposition that the next government must slow down the spate of spending on new public infrastructure because the country is in
too much debt., but selecting Cocoa House as an example is nonsense, particularly given the countless number of completed and uncompleted white elephant projects that more recent generations of politicians have left littering the landscape across the country.

DeLaRue:
Awolowo built industrial estates in Lagos. Today, industrial activities in those estates contributes hundreds of billions to Nigeria 's GDP.

He built roads, residential estates, schools, hospitals etc. These are all infrastructure and they have contributed massively and some are still contributing to Nigeria 's economic development today.

Whether current generation know what to do with Cocoa House is a matter for them. And do you think all the tall buildings you see in New York, Hong Kong, London are utilised to their full potential. The answer is no. Yet, more are still being built in those locations.

I agree with your base proposition that the next government must slow down the spate of spending on new public infrastructure because the country is in
too much debt., but selecting Cocoa House as an example is nonsense, particularly given the countless number of completed and uncompleted white elephant projects that more recent generations of politicians have left littering the landscape across the country.

Was there ever a time cocoa house generated revenue ? I want to know ...and how did it generate the revenue

I have zero problem with cocoa house just that it's a feel good project you build during prosperity to show wealth not to drive development

The sky scrappers abroad where built by businesses because the demand was there


My point is when you have limited infrastructure like we do now ... Providing access to credit not infrastructure should be the way to kick start economic growth

How do businesses make more money if they refuse to invest in capital projects. The same thing goes for Nigeria as a country. Government should however embark on projects that will impact on our citizen. Cocoa house is a good investment it is even in a very good location. Companies do rent it for their businesses. Koko dome is also in the same compound. All these facilities can be modernized and turn to a relaxation site. Companies also pack their cars inside their compound.

Infrastructure like roads and stable electricity are very very important.

If I may ask,
Pls what is your product?
And what is your power source? Gas or diesel?

mrvitalis:

You don't need electricity it's not a a factor businesses consider

Generating electricity in Nigeria is already cheap or every business ...I personally run a factory that has never been contacted to NEPA n never will yet power accounts for less than 5% of my cost of production

Power is not important for now we are too broke for that

I sure agree @mrvitalis that not all infrastructural projects lead to proportional returns for the economy.. Some are just for better standard of life. BUT some infrastructure like electricity are very important for the economy as not every small scale manufacturer in all parts of the country can afford a gas plant or running diesel gens.
Meanwhile d investment you are talking about can even come by FDIs but then security situation, bad policies & lack of rule of law have chased away investors

Nonsense write up. There's a bank of Industry already. Infrastructure in fact drives development. Power plants, good roads, rail lines and sea ports etc.

The Hen or the Egg, Which comes first? this is the question mrvitalis is trying to answer but most of you cannot understand him.

In my view, the most important infrastructure needed for industrialization is "affordable electricity". The larger the production capacity of a power plant, the cheaper the unit price, so the more people who can pay for electricity, the cheaper the electricity is for everyone.

Nigeria is a highly unequal country with a few people controlling most of our economy. An average Nigerian can not pay for 24 hours of electricity at market rates. if the Government took over the responsibility of basic education from middle-income parents, more Nigerians will be able to afford electricity making power cheaper for business people at the same time, fighting poverty and creating a productive labour force.
America, the most capitalist country in the world funds public basic education for 90% of its children.

Solving Human Capital Development first will directly solve the infrastructural deficit in the country.

cc nairalanda1

[quote author=mrvitalis post=123199797]
Many Nigerians believe the fallacy investing in Infrastructure drives development ; this is a massive problem ,I believe this started with awolowo and his socialist and the idea stuck ,Baba was building cocoa house , nta ,Nigerian house ...big project that offers no economic benefits...how much does cocoa house generate today ?
Runing government is like running a business ...GDP is likened to business revenue ( turn over ) while government revenue is business profit

None economically viable project are like beautification of your office/business premises , people can say this man has best office space , it's pleasing to the eyes but has little or no impact on your business ...tho they are important, a struggling business like don't need beautification , we need revenue and profit ....we owe too much and can't fund our business expenses so we borrow ....but instead to buy more goods we use it to beautify our office

Nigeria don't need rail lines , we dont need second Niger bridge for now !!! our profits can't even pay staffs yet we borrow to repaint our toilet n change toilet sits to world class ones ,does that make sense ?

You need loan to buy more goods to make more profit .. in government it's creation of new tax payers by providing easy and cheap access to credit in areas you have identified we have a comparative advantage

Let's take lagos to Ibadan rail for example...it cost us about 800 billion plus .... employs less than 3000 people ,still needs government funds to run ... addition to GDP almost zero ,net revenue negative

Now imagine same 800 billion given to banks at an interest rate of say 3% banks to give them out at 10% ...each business has 3 years before loan repayment starts ...

Conditions access the loan
you must a Nigerian or lived here constantly for 15 years

You must be a business that has export potential ( your production cost must be less than international price )

Or

You must be a business that want to produce goods we import at a price less or equal to the products landing cost


You must be willing to employ 50 Nigerians minimum pay should be 300k monthly

You can get 2 billion to 10 billion

Let's say average of 6 billion is given out

133 businesses would be created ... employing minimum of 6666 jobs

If those business make an average profit of 2 billion yearly ...Nigerian profit tax is 20% ....that's a guaranteed 53 billion per year

Employee tax is 15% I think ...that's extra 36 billon per year ...that's 89 billion yearly ... remember after 3 years interest and loans payment starts

Say 40% if the business failed

You still get 53 billion in revenue as a government ....this can comfortably cover for the 40% failure of business n debt servicing would be an issue ...GDP would grow by over 2 billion dollars

But no we built rail

I would bee doing a series on this to defend my ideas ...Nigeria must move from this socialist mindset and be more capitalist to grow [I agree with you totally]

This guy does not know that cocoa house was a statement of intent.
Standing alone ,mean nothing . But the vision behind it is as good as it get .
After building industrial estates ,farming settlement ,roads ,waters works and covering other basis like education ,health .The last jigsaw in the puzzle was big business.
Business organised to take advantage of the social and physical infrastructure provided. Cocoa house was the “ Look up to the sky statement” call on the Western Nigeria business community.
People of a certain age still talk about this building today .That is how much psychology impact it made. The face of Ibadan central business district and probably Nigeria would have been different if politics had been played right in the first and second republic.

being:
I sure agree @mrvitalis that not all infrastructural projects lead to proportional returns for the economy.. Some are just for better standard of life. BUT some infrastructure like electricity are very important for the economy as not every small scale manufacturer in all parts of the country can afford a gas plant or running diesel gens.
Meanwhile d investment you are talking about can even come by FDIs but then security situation, bad policies & lack of rule of law have chased away investors

If Nigerians must develop FDI is a no no they should be discouraged even unless they are from Nigerians abroad

FDI is bad for every developing economy ....I would do a write up on that soon even