The federal government is considering investing pension funds to improve infrastructure in the country, an official said on Thursday.
Speaking after the National Economic Council (NEC) meeting in Abuja, Governor Nasir El-Rufai said there are 200 other jurisdictions that funded their infrastructure through workers pension funds
He explained that the funds will be recovered over time with interest “because rails and roads will make money.”
“Roads make money in three ways. First is through toll gates but usually does not cover the cost of paying back any loan you take to construct the road. Secondly, you invest in land on the right of way along the road. Because along that lane whenever you build the road, people move, they need housing, shopping malls, schools.
“If you invest in the land, on the project company that builds the road, they will earn some revenue from toll, they will also get land to develop commercial properties and make more money from those sources to cover the cost of servicing the loans.”
He said the loans, which have lower interest rate of between 5 to 6 per cent, are usually long term between 20 to 30 years.
“The pension money will not be lost, in fact what is invested will be gotten back with interest,” he said. “You get the public benefits of safe roads that will keep those pensioners contributing that money alive, provide jobs for their children and create economic opportunities overall for the country.”
Roads, death traps
In November, the Minister of Works and Housing, Babatunde Fashola, was criticised by many Nigerians for saying that the roads were “not as bad as sometimes” portrayed.
He was challenged by a member of the House of Representatives, Bamidele Salam (PDP-Osun), to a 90-days road travel your.
Meanwhile, Governor El-Rufai said: “we all agree that our roads are terrible and the cost per kilometer of Nigerian road is the highest in the world because of delayed completion.”
He said the issue of bad roads span 20 to 30 years.
“I was a member of the Federal Executive Council in 2005 that awarded the Abuja-Lokoja road. It was supposed to be completed in two years. It is 15 years since it was awarded, the road has not been completed. What does that mean? Prices of cement, asphalt goes up, contract reviews, interests in delayed payment is factored in,” he said.
He said, “Going forward, if Julius Berger needs N100 million for Abuja-Kaduna and the money is there, they will not put in an interest element. It will not be expensive because the money is there, they will not factor in long term interest because of delays.
“So there are all round benefits to society but most of all these projects will be delivered off the balance sheet of the Federal Government of Nigeria.”