Monday, 10 June 2013

Structural deficiency in Nigeria’s budgeting system assailing economic plans, says Alufohai

Agele Alufohai is the President of the Nigerian Institute of Quantity Surveyors who holds the belief that the competitiveness in Nigeria’s economic structure is currently being undermined by mediocrity and corruption. In this interview with Business Editor, ADE OGIDAN, he prescribed options capable of bailing the country out of the quagmire. Excerpts:
HOW would you assess the practice of quality surveying in the country today?

Agele Alufohai
My name is A. Alufohai. Today, we have very capable quantity surveyors handling the practice in the country. Quantity survey has grown tremendously from what it used to be decades ago. What is gratifying is that the quantity survey business in Nigeria is commendable. In the 60s to the 80s, quantity surveying fared considering other fields where you still have the domination of foreign firms. This is because of our hardwork and drive in terms of skills and capacity building both in Nigeria and Abroad.

What do you have to say about collaborations between Nigerian firms and foreign consortium?
Neigbouring countries and South Africa are seeking reciprocity in terms of issuance of certificates so that foreign firms can come and practice and are well acceptable in Africa with many Nigerians. Africans have not relented in their quest to obtain Nigerian certificates in order to make them practice here in the country. Nigerians abroad also go the extra mile to obtain international certifications, especially that of the Royal Institution of Chartered Surveyors and that has also been our strength. The emphasis is the background, knowledge that we acquired there.

But how have you been able to tackle the issue of regulation?
We have the Quantity Surveyors Registration Board of Nigeria, the regulatory body recognised by government. The Nigerian Institute of Quantity Surveyors (NIQS) is out to train our members to attain high professional status. There are three stages before writing the professional corporate examination for any graduate. After that, the NIQS will now recommend such person to the registration board. They ensure that we do not have undue challenges once you become a registered member; you use your stamp and seal. This restricts infiltration of quacks. We also have a directory of members and firms, which has been circulated to corporate clients. This helps to check the issue of quacks. This forms part of our publicity strategy such that for a person to be engaged by a company, he must be a registered member of NIQS. With documents like this and public enlightenment we have been able to reduce the number of quacks in the industry.

It is quite gratifying that professionals in the country are indigenous practitioners. We still have heavy presence of foreign contractors lobbying for contracts. To what extent are those contractors engaged by government?
That is a big issue. To a large extent, they patronise our members. But what we are clamouring for is that government should patronise indigenous firms. Quantity surveyors are cost economists and specialist advisers to the construction industry, especially, the monetary aspect, which is the core of any project. Contractors don’t joke with us because we assess and provide what the cost of a project would be, you can hardly find many of these foreign construction companies employing qualified architects and engineers but you will find qualified quantity surveyors in these companies. The reason is because, when it comes to construction, the architect designs, but the quantity surveyor determines the cost of the budget. It is based on this that procurement is done by contractors. This helps contractors to make realistic budgets. You will find the active participation of architects and engineers at the site of construction. The quantity surveyor also helps to assess the progress made at the site of construction and determine how much to be paid to contractors. In essence, the quantity surveyor is like the hub of the wheel in the construction industry.

With such profile, to which extent are your members involved in budget preparation especially in the public sector?
That is where we are not involved. Unfortunately, I have never worked in the civil service but I have friends there. However, the budgeting system is structurally defective in the sense that budgets are done yearly based on historical method rather than needs. Experts are not involved in the budget parameters especially in the cost issues. What I think is happening is that the accounting profession is so old and they prepare budget based on historical methods.

We need to do it right like it is done elsewhere in the world. The budget office should involve inputs of professionals in budget drafting. Various ministries have some quantity surveyors. However, the extent of involvement of the surveyors is not known to us. However, we have never been invited for their consultations. When it comes to budget preparation, the usual ground word is not always done properly. We have non performing budgets because budgets are not prepared based on needs.

If you look at the budget trend of other countries in the world, they dove tail into each other. That is, the long term and short term budgets. Budgets should be prepared in such a way that where there is succession of governments, the budget remains operational. All that would be needed to do is just align the yearly budget with the medium term budget already prepared. This would also reduce the littering of abandoned projects in the country.

That is our core strength as quantity surveyors
Yes. We have been able to provide a lifecycle model. From inception to construction to maintenance. Quantity surveying is about cost, cost analysis and even project management.

Are you saying that all these anomalies in budget preparation, especially in procurement, have not been taken care of in the present procurement Act which is a product of a long debate?
It has, but the execution is an issue. The theoretical aspect is good. If the budget office gives a certificate of no objection to a ministry and the ministry is not giving the money, there will be issues. Even when you have the money, it is usually not enough to execute the required project. That is where the dilemma is.

Could it have been a fallout of the overwhelming recurrent expenditure injuring capital spending over the years?
Yes, the percentage of recurrent expenditure is far above capital expenditure. That is where you need to encourage the private sector. Out of the limited capital, use it to encourage and create an enabling environment. If private-public partnership is encouraged, there will be no abandoned projects.
Creating an enabling environment includes creating infrastructure to aid businesses. For instance, compare Lekki to Osborne Phase II in Lagos here, where infrastructure are in contradiction to each other. The roads, drainage and others are in place in Osborne and this has increased the population in that area compared to Lekki. The infrastructure in the area is not in place in Lekki. The same government has for a long time been collecting capital contribution to provide these basic infrastructure. In Lekki, today, most houses are build below the road level. If you come to Lekki in a rainy day, it is almost difficult to have access to some places. Government needs to plan effectively and encourage public private partnership to reduce recurrent expenditure. Project conducted solely by private sector are usually effective with basic infrastructure in place.

In Nigeria, the private sector is relatively under developed and finds it difficult to assure the drivers’ role in economic development. What is your assessment of the private sector in driving this growth?
The Nigerian private sector is just beginning to get it right. Government has over time neglected that sector. They didn’t see the private sector as partners in progress. They just realized that there must be a synergy between the public and private sectors in order to drive the economy. That is why there is a clamour for public private partnerships. For government to indicate that they are now serious, we now have the infrastructure construction Regulation Commissioner which now has Ken Nnamani is its new chairman. This commission has only been in place not tioo long ago. So you can imagine. This is what people use to drive growth in developed economies to drive investments. It is only recently that we have concessioning in our vocabulary. It is only through concessioning that non-functioning federal agencies are driven for effectiveness. I believe that PPP is the way to go. However, we need to ensure that government’s intention is sincere and properly driven to ensure transparency, accountability and integrity.

How can you relate PPP and skills of quantity surveyors for lifecycle management to the provision of mass housing?
I would like to commend Alhaji Lateef Jakande for providing that initiative to care for the housing needs of the masses. You have on one hand, the issue of mass housing and on the other, social housing. What Jakande did in his own time was more of social housing. To a large extent, I was an active participant during that period as I was working with G.Cappa Plc then. We submitted a proposal to him because we were aware of the project then. Now, most of the houses cannot stand the test of time. If go to Jakande estate at Lekki, most of the houses are not in a good state. This is because the project was done by political contractors. If it had been constructed by certified professionals, things would have been better. What we are saying is that you can employ political contractors but we would let them work according to professional standards. The profit that they think they would make would still be accrued to them.

If you look at schools and buildings built by Mudashiru, they are still there today because he engaged the private sector in the project. This is unlike Jakande buildings. The solution is that cost professionals should be involved in the project.

Urban renewal requires a lot of things. When I visited Jakande estate, I discovered that there are lands that are not being utilized especially those ones extending towards the Lagoon. Majority of the people there are under-utilizing their apartments. To achieve urban renewal in such areas, Fashola needs to erect more buildings with floors and properly managed by professionals. You can move people living along the road to the new buildings in order to renovate the old buildings with owners still retaining the titles of their lands. It is done all over the world and Nigeria can replicate this too. Government just needs to partner with the private sector. You will discover that such a prime land is wasting in that area.

On land economy, you will discover that Jakande estate on Lekki road is a sharp contrasts. You can use political machinery to driven PPP that would enhance development.

What can you prescribe as solution to the Jakande estate issue?
The estate is located in a prime location. The buildings in the neighbourhood are in sharp contrast to what you have in Jakande estate. The houses in Jakande estate are no longer fit for the area. All you need to do is apply the same model as to all Jakande estates and begin to do away with all of those old buildings. They are collapsing. Government needs to decommission the buildings. The buildings are due for decommissioning.

Governor Fashola should decommission Jakande estates. But in doing so, he should put in place a replacement structure that will make sure that all the people that have titles are still retained in an elevated environment. In terms of land economy, we should now be expanding vertically rather than horizontally because the land that is seating a house can seat ten floors. In terms of land economy, you are wasting that land. If you build a high-rise building, more people would be accommodated. This will also bridge the social gap. It would extend the lifespan index and reduce the pressure of traffic. However, a proper maintenance culture most be put in place.

In terms of capital projects, to which extent do you think that fiscal and monetary policies have been supportive?
We are not using maximally them and effectively to support the construction industry. If you however look at this year’s budget on construction, you may commend the Jonathan administration. We however need to see capital projects to the end. The construction industry is the barometer of the economy because when construction activities take place, employment will be guaranteed.

The budget allocation to the constructive industry is a mere four per cent but the entire consumption from conception to conclusion, is heavy. In other climes, budgetary allocation to the construction industry is high. The funds pooled from taxes should be used effectively. Government must also encourage the mortgage industry of the economy. The Lagos homes scheme is encouraging but this can be encouraged nationwide. The housing policy has been with the National Assembly for a while and we hope they will pass it into law soon. That would also aid employment and provide for housing needs in the society.

Source: The Guardian

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