The contribution of infrastructure to Nigeria’s economic development and future prospects

Introduction in that location is habitual consensus that in that location is a positive consanguinity surrounded by culture in the pecuniary sphere and frugalal ontogeny providing the heart and soul to mobilize and to allocate funds in the parsimoniousness (Masha et al., 2004 Shaw, 1973). However, pecuniary phylogenesis is in like manner shown to be inadequate to cause stinting festering of cristal be considered to be a passive handmaiden avail to enhance the output and contribution of the authorized welkin ( merchandise) (Firzli and Bazi, 2011 Olaseni and Alade, 2012). There is thereof choose for enhanced digest on the harvest-festival of the echt sector, which in most cases is confidential sector rallyn and includes sparing activities of a soils citizenry. Herein lay the import of al-Qaida break-dancement and the need for its align pursuit with pecuniary sector using for enhanced written report sparing development. This interrogation assesses the potentialityity for utilizing understructure enthronement to enhance economic development in Nigeria, seeking to show need for enhanced focus on base of operations enthronisations to execute the pastorals desired economic off plant and a positive future day facets.Aim of inquiryThis research proposes that there is signifi locoweedt potential for utilization of cornerstone investment to fulfil enhance economic development of Nigeria. Through the assessment of this potential and abbreviation of establishment efforts towards managing foundation inadequacies, this research endeavours to answer the question What is the potential for utilizing theme investment to enhance economic development in NigeriaIt seeks to show that infrastructure investments atomic number 18 justifiable in the quest for economic growth and squ argon-built future economic development prospects for Nigeria.Research ObjectivesWith regard to its overarching theme, this research aims to pass the following objectives To assess the correlation amidst infrastructure development and economic growth To assess infrastructure inadequacies in Nigeria impeding the verdants economic growth and what measures are being taken to address them. To apprise encroachment of infrastructure development past and present on Nigerias future prospects and economic outlook.Structure of proposalFollowing is a retread of literature which lays the foundation for the subject under remove. It is followed by the research methodological analysis outlining techniques and approaches employed in the conduct of study.Literature reviewThere is general consensus that there is a positive relationship amidst development in the fiscal sector and economic growth. While acknow directging that financial institutions fork out the means to mobilize and allocate funds in the economy hence enhancing development, Schumpeter, in his 1934 work, did non perceive financial sector development as being the cause of economic development. Later in 1954, Robinson supports this view arguing that the financial sector is a handmaiden of economic development, which is passive and responds to inescapably in the veritable sector (which encompasses economic drudgery including manufacturing) and thus growth in the touchable economy (Masha et al, 2004). However, McKinnon (1973) and Shaw (1973) argue that the financial sector bottom be more than a passive handmaiden and a study number one wood of economic growth if it is relieved of its restraints. With repression, they argue that the financial sector responds passively to the needs in the real-sector and give the bounce only drive economic development if liberalized. It is settled for most research work that there is a decisive link, between growth in the financial sector and in the real sector (economic production). In an article in 2005, Asagowa identified close to ten indices of growth and deepening of the financial sector. These include r ate of growth of encompassing money relative to gross domestic product (diversification of the economy), interest rates spread, and ratio of financial assets to GDP, among others (Babatunde, et al, 2012). radical is a significant contributor to growth in sectors of the economy such as manufacturing and other forms of production easing and facilitating essential destiny processes.Financial sector reforms and economic developmentUp until the fourth absorb of 1986, Nigeria pursued a government-led economic development paradigm guided by discipline Development Plans. The government dominated all sectors of the economy including agriculture, commerce, process (especially transitation), and industry, among others, with the mysterious sector playing a passive role. Since its independence in 1960 and subsequent discovery and exploitation of oil through the 1970s, the government had adequate resources to finance these development plans to a reasonable proportion ( humankind cant, 2 010). However, poor pecuniary discipline upshot to the revenue windfalls deriving from oil saddled the people with a significant external debt burden. The disregard of other sectors of the economy led to a fall in inter topic trade, and as wholesome resulted in high un consumption rates and slow growth of output. These led the government to believe its underlying philosophy of development resulting in a shift in paradigm to a private sector-led paradigm. With this shift came relief of stringent regulations organization every sector which were put up to enhance government check but which impeded the enhancement of performance and growth (Akinyosoye, 2010). In 1984, therefore, a programme was fashioned called the Structural Adjustment Programme (SAP) which attempted to touch on the countrified away from direct government stamp down of economic activities to indirect control such as through market forces. This involved entirespread deregulation of trade, exchange, finance , among others. However, in spite of the incr go in the number of financial institutions and greater variety of financial instruments and freedoms, the real economy showed no pronounced emendment with all macroeconomic indicators declining three days into the parvenu millennium (World Bank, 2013). The outlandish suffered debilitating external debt, high inflation (highest at 72.8% in 1995) (FMW, 2012 NNBS, 2013), high level of fiscal debt, underemployment and low capacity utilization in industry and agriculture. There was general distress also in the financial sector with high levels of insolvency and non-performing loans (Firzli and Bazi, 2011). Financial reforms have not been entirely winning translating into economic growth to desired levels. In this regard, there is need for aligned pursuit of growth in the financial sector with that in the real sector, which is facilitated by infrastructure development. Herein lay the import of infrastructure development. floor and econom ic development al-Qaida is herein defined to include the sectors of transport, pee and sanitation, telecommunications, power, among others. In all countries across the globe, this aspect represents a capacious portfolio of expenditure, ranging from a three to a half of knowledgeability investment (Akinyosoye, 2010). tending(p) the main(prenominal) capital requirement and the length of time it takes for benefits to manifest, there has been concern and conceive among economic policy makers, politicians and the general man regarding the performance of infrastructure and its impact on economic development (Patunola-Ajayi, 2013). However, AEO (2013) and WEF (2010) among others present a widespread correspondence that the inadequacy of physical infrastructure in a province is among study constraints impeding sustained and b lane-based economic development. There are several(a) correlations between infrastructure and economic action at law. In the victimize term, the const ruction phase is associated with attendee decision in the public sector that could have an influence on macroeconomic variables such as GDP, employment, public deficit, inflation, among others. The public investment and so expands aggregate demand, yielding a boost to employment, production and income (Patunola-Ajayi, 2013). In the specialty and long term (the utilization phase), there are macroeconomic personal upshots such as enlarges in productivity over the territory and in the private sector, as well as its effect on the spirit level of competitiveness of an economy (ADB, 2012 Foster and Briceno-Garmendia, 2010). Additionally, various benefits derive from infrastructure development. The approachability of infrastructure influences the marginal productivity of private capital with investment of public capital in infrastructure in a exceptional localisation often attracting additional flow of resources (Akinyosoye, 2010 ADB, 2012). Infrastructure operate such as transpo rtation, electricity, and pissing are also intermediate inputs to production. Public capital invested in infrastructure therefore complements private capital and serves to enhance economic development (ADB, 2012 World Bank, 2010). Services thereby generated as a result of adequacy of infrastructure translate into increased aggregate output. At the microeconomic level, the effect of infrastructure is specifically seen through the reduction in the cost of production derived from its impact on profitability, output levels, employment and incomes (Myers, 2007). This is particularly the case for humiliated and medium scale enterprises. Extensive and efficient infrastructure is critical in ensuring effective functioning of the economy and is an most-valuable factor in the closing of the location of economic employment and the kind of sectors and/or economic activities that can develop in a particular economy (Patunola-Ajayi, 2013). There is also the intermediate input for economic d evelopment which encompasses higher productivity obtained from better human capacity development. This can be bring outed through improvements in healthcare, nutrition, education, better roads and transportation, and access to electricity to households as well as telecommunication services which modify the creative engagement of citizens and access to loading economic activities (Wilhelm, 2010 Akinyosoye, 2010). On a global scale, and regarding inter field of study trade (trade logistics), there is also an impact on the cost and quality of service which lay competitiveness in export and import markets. Infrastructure reduces the effect of aloofness between regions, changes the integration of national markets, and creates connections at lower cost to markets in other regions or countries (WEF, 2010 ADB, 2012 KPMG, 2012). A remarkable positive effect of infrastructure development has been adduced by models such as the Cobb-Douglas which yield a median value of 0.30. This means that public investment equivalent to 100% of the public capital stock would lead to a 300% growth of private production (Babatunde, et al, 2012). Investment in infrastructure is therefore among the important mechanisms through which to increase income, employment, productivity, and consequently, the competitiveness of the economy.Infrastructure development in NigeriaNigerias economic growth is largely driven by the capital-intensive oil sector which continues to drive the economy. The average growth of this sector was about 8% comparable to -0.35% for the non-oil sectors (NNBS, 2013). Given its limited job creation capacity, focus on this sector has not translated into sufficient jobs resulting in poverty and disenfranchisement of the greater population and, therefore, the countrys low rank in the Human Development Index (HDI) (NNBS, 2013 The Guardian, 2012). In this regard, King, 2003 FMW, 2012 and AEO, 2013 show that economic growth has not translated into sufficient job creation and/or poverty alleviation with unemployment increasing from 21% in 2010 to 24% in 2011 (King, 2003 NNBS, 2013). The countrys outlook for growth remains positive, though, with an gradebook economic growth rate of about 8% (KPMG, 2011 NNBS, 2013), and an anticipated GDP growth rate of about 12% in the next flipper years (NNBS, 2013 AEO, 2013). This outlook pegs its vision 202020s aspiration to get to a GDP of $900 billion (FMW, 2012 NNBS, 2013) predicated on improved sectoral performance, the propulsion of a better business environment, and supportive government policies focused on stableness in the macroeconomic environment and increased investment. This is however contendd by short and medium term downside risks which include security challenges due to religious strife in some of its states, slowed global economic growth in major economies of the world and the crisis of the Eurozone (Olaseni and Alade, 2012). There is therefore a great need to beam the Nigerian economy makin g it broad-based ( two favorablely and geographically) and to expand the sources of growth. The development of agriculture, manufacturing and services could change the broadening of growth, creation of employment and reduction of poverty (AEO, 2013). The country is therefore addressing the infrastructure deficit in the country to create linkages and to enable such diversification which would enable inclusive growth (FMW, 2012). Infrastructure make a one percentage point net contribution to the countrys improved per capita growth performance in recent years (NNBS, 2013), notably held back by unreliable power supply (Olaseni and Alade, 2012). In spite of the obvious importance of infrastructure to the nation, governments both at the national and local levels have continued to pay lip service to the intend of infrastructure (Financial News, 2014). As a consequence, the countrys growth prospect is undermined. The following section offers a glimpse at some of the countrys major infra structure inadequacies.Inadequacies in infrastructure developmentUrban housingLack of proper planning and management of rapid urbanization has led to uncontrolled growth in major cities and towns to accommodate an informal economy which stands at 60-70%. This has had a shun impact on the landscapes of urban centres, leading to decay of inner cities, growth of shanty towns especially in peri-urban areas, consequently limiting their contribution to the national economy being inimical to security and good governance (UN Habitat, 2010).TransportThroughout the country, roads are neglected, particularly those connecting major cities, the sea port and commercial centres to the boondocks which are bad and deteriorating. Efforts at repair are often in vain due to the use of substandard materials. Though having the potential to provide a cheaper means of transport, the vivacious rail network is old and dilapidated, having served half a century after being built by the British colonial gove rnment (ADB, 2012). Attempts to procure new coaches or to create new routes have not succeeded. This has fostered the development of a disorganized and unregulated private sector freight and passenger road transport system, which has resulted in art congestion in cities, increase in motor accidents, and environmental defilement (UN Habitat, 2010). Given Nigerias endowment of water shipway and long stretches of coast with potential for transportation, this option, which could ease congestion on roads and aid easier movements, is neglected and the water ways are left undeveloped. There are only a a couple of(prenominal) canoe and ferry routes which are ill-equipped having no good jetties, harbours, safer boats or ferries. The recently refurbished mini-port at Ikorodu, Lagos State provides relief to commuters going through the Ikorodu-Lagos-Lekki road where they now only cross by ferry to Ajah (Akinyosoye, 2010). This is evidence of potential and should be replicated across the count ry. Transportation of heavy onus through waterways can save drag on roads. There have been recent attempts to improve/ renovate airports which have for a long time remained in fell condition, and to address the challenge of adequate capacity. Travelling by air is even-tempered expensive in Nigeria compared to international standards with charter options such as helicopter, cargo and passenger planes largely untapped. Air transport has the exceptional advantage in terms of speed, time of travel and distance considerations. It is also of high value in relation to weight and is preferred when accessibility is a challenge (Akinyosoye, 2010).Electricity supplyThough it forms a significant avenue for economic empowerment of the people and country as a whole, the power crisis in Nigeria persists. Irregular supply impedes production and manufacturing and consequently some entities have had to relocate leading to loss of employment opportunities (UN Habitat, 2010). The country currently generates 4000MW which is inadequate compared to South Africas 34000MW (Olaseni and Alade, 2012). There are however efforts and resources being planned in the medium term towards enhancement of power supply but quite a lot needs to be done inclined the importance of power in economic development and well-being of citizens who make use of generators for their power requirements (Olaseni and Alade, 2012).Water supply infrastructurePopulation pressure has strained water supply capacity with damaged supply pipes, deteriorating water treatment infrastructure and erratic power supply challenging the supply of safe water to the population. To many, the main sources of water are boreholes, wells, springs, flowing rivers, and permit whose safety for human consumption is not guaranteed. Poor sanitation and consequent diseases impacts overall health and well-being of citizens and their productivity (UN Habitat, 2010).CommunicationThe emergence of cellular phones has revolutionized the public and private business environment, bridging communication gaps that hitherto existed. There has subsequently been a reduction in unproductive business trips and an enhancement of transactions. High prices of service and poor reception, inadequate capacity and coverage however need to be addressed for this aspect to facilitate expected economic growth (Financial News, 2014). There is obviously greater need for the Nigerian government and constituent states to develop adequate and effective infrastructure. This requires a more strategic approach to tractor trailer its dearth which has been deemed to constrain the required economic development. There needs to be robust strategic planning, strong political forget, as well as the right procurement approach to achieve long term victor (Akinyosoye, 2010 AEO, 2013). According to World Bank (2013) estimates, Nigerias vision and aspiration to attain middle income status by 2020 requires sustained investment in infrastructure of about $14.2 billion over the next decade which is about 12% of its GDP. The current investment is $5.9 billion (5% of GDP) (NNBS, 2013) falls short. Expenditure on provender imports is a significant at $90 billion a year (NNBS, 2013 World Bank, 2013) and is unnecessary given Nigerias potential in agriculture, victorious up resources that could finance infrastructure development (World Bank, 2013). Reducing this bill requires investment in enabling infrastructure such as rural energy, transport systems, telecommunication and irrigation systems. However, much of Nigerias impetus for rural development result derive from investments at the level of the State though such infrastructure run by the State and government is prone to low tutelage and support, hindering efficiency and effectiveness (Olaseni and Alade, 2012). Current development of public infrastructure is occurring in tandem with a huge expansion of private sector developments, particularly in the property market (ADB, 2012). Contin ued urbanization and an uphill middle class, as well as a shortfall in quality office space for investor companies are key drivers for this wave of real estate development (KPMG, 2011 FMW, 2012). The success of ambitious infrastructure developments is likely to increase investors appetite to expand their operations and capture the anticipated growth, portends significant potential for economic growth (AEO, 2013).MethodologyResearch PhilosophyThis study employs a pragmatic philosophy which embraces both positivism in its opening up and confirming valid causal relationships which can therefore be used for prediction and subjectivism which appreciates the difference between humans as social actors, with varied views of reality, values and knowledge (Creswell, 2002). condense in this regard is on observable phenomena and their subjective meanings driving apply research integrating different perspectives to help in the interpretation of info.Study technique and StrategyGiven the cont extual nature of the study and its focus being an attempt to eager the impact of infrastructure development on Nigerias economy, a soft inductive approach is deemed to be a suitable approach enabling a detailed geographic expedition of the subject (Quirke, B., 2008). The inductive approach is useable in condensing varied and extensive data into a plan and summarized format while establishing links between research objectives and findings obtained (Saunders et al., 2000). This technique involves the exploration of published literature on the subject including government reports, working papers, as well as journals and other relevant literature. This research also employs a quantitative technique in the conduct of interviews in a social survey to targeted experts in Nigerias development ministry as well as government leaders in sample states. This would enable the acquisition of randomness on actual infrastructure investment and development, cross-checked to the particular regio n by local officials towards the realization of study objectives. This would also enable the acquisition of opinions and knowledge on the actual contribution of infrastructure to increased economic employment in the various regions, and/or the enhancement of life which is a trumpeter to increased productivity.Practical ImplementationThe targeted experts chosen for the survey include random sample of 20 officials in the national federal Government in charge of oversight of infrastructure development in the countrys 36 Federal States and the administrative areas of the Federal Capital territory and urban councils. This will enable the attainment of a comprehensive view of projects and prospects given that they comprise the control centre for the entire nation, and arebetter placed to notice and to identify increases in economic activity reflected in increase in revenues to Local government areas and urban councils, and tax revenues to the nation state. This survey will take the f orm of a structured interview administered by the researcher, a method which ensures consistency of results obtained and answers that can reliably be aggregated. Its format is as appears in Appendix A comprising both closed- and open-ended questions which afford the research the capability to compare and/or contrast interviewee responses in order to answer the research question (Creswell, 2002).Analysis approachData obtained from interviews will be analysed using SPSS which enables the production of graphs which would enable the study to show correlations between infrastructure development and increase in economic activity (growth in the real sector) which enables evaluation of its actual or potential impact. A wide and extensive exploration of literature, as well as congruence on the ground as assessed by target experts enhances reliability and validity of data obtained (Creswell, 2002). The choice of a representative sample from across the entire country enhances the studys genera lizability and thereofore its capacity to make comprehensive deductions on the subject (Creswell, 2002 Saunders et al., 2000). Findings showing an increase in economic activities in areas recently served by new or improved infrastructure entry of medium and large scale investors to locations supported by actual or prospective infrastructure investments as well as increases in local and federal government revenues signify the contribution of infrastructure investments in increased economic activity engaging the population in the regions and overall expansion in the real sector. These are expected to translate to economic growth and positive future prospects for economic development.Limitations of studyAssessment of the impact and actual correlation of infrastructure development on economic growth might be a challenge given the length of time with which the utilization of infrastructure translates into tangible economic activity and causes observable effect on the countrys economy. s cotch growth of a country depends on the interplay of several factors including financial deepening, investor confidence, the encouragement of various economic activities, among other socio-cultural and policy factors. The isolation of the contribution of infrastructure development is therefore a challenge and might affect the outcome of this research.Ethical ConsiderationsIt is compulsory in research to ensure that the survey approach and activities do not portend psychological or social harm to interviewees. An initial important and significant gradation is in ensuring that the researcher seeks informed consent from the particular interviewees and as well from their superiors in departments or other actors whose areas of duty and obligation whitethorn be touched by the inquiry. This would ensure that there are no breaches in confidentiality, and also ensures that interviewees are not put in tight spots and forced to discuss sensitive areas and information which may be of psych ological harm. The researcher should also be keen to bill potential language barriers and cultural practices such as cultural sexual activity power disparities that may impede the smooth progress of the interview and which may also negatively impact the interviewees making them feel incompetent or hindered in their participation. In such cases, the researcher should seek support of interpreters and conformable man-to-mans to help out in the conduct of the interview enhancing comfort and therefore output. Alongside the above considerations, it is also worthwhile to ensure that time set aside for interviews and other activities such as prior meetings is properly consented to both by management or superiors in the relevant departments in which the interviewers are, as well as by the interviewees themselves. This would ensure that the interviews and related activities do not infringe on official or personal schedules, as well as personal, cultural or religious preferences or obligati ons. The interviewee should also be informed of their right to answer a particular question or to terminate the interview altogether. The researcher in this study therefore in the foregoing will endeavour to obtain proper consent for study survey respect privacy and goodwill of participants by not request hypersensitive or confidential information respect cultural norms and individual preferences of interviewees ensure the confidentiality of data collected protecting it from access by third parties, and, to honestly and accurately report information obtained from the survey, avoiding the identification of interviewees if they wish that their individualism be waived.ConclusionReform in Nigerias financial sector is inadequate for economic development if the economy is not diversified and if citizens are not engaged in worthwhile economic activity. For the government to achieve this shift there needs to be a focus on infrastructure development, which would encourage private investment s, enhance well-being of citizens, reduce existing constraints, and overall increase in economic activity which contribute to economic growth. Further research is required to clearly show correlations between investment in infrastructure and economic growth and future economic prospects. This would enable its effects to be isolated from among other factors such as financial deepening which are also essential for economic growth and development.ReferencesAfrican Development Bank, 2012. An Infrastructure Action Plan for Nigeria Closing the Infrastructure cattle farm and Accelerating stinting Transformation. ADB Group report Africa Economic Outlook, 2013. Nigeria Economic Outlook. AEO Report Akinyosoye, M., 2010. Infrastructure Development in Nigeria highroadmap to Sustainable Development. 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