The recent G7 Summit recognised the vital importance of ﬁnancing infrastructure projects in low- and middle-income countries across the world. Trains, roads, and ports will be ﬁnanced through the US led Build Back Better World Partnership (B3W), an alternative to China’s controversial Belt and Road initiative (BRI).
High quality, high performing, eﬃcient infrastructure is crucial to economic growth and an improved quality of life for any population. B3W represents a signiﬁcant opportunity for the democracies of the G7 to narrow the $40+ trillion infrastructure gap. It is aimed at unlocking private capital to invest in projects to reduce the risks of climate change as well as promoting improvements in healthcare and digital technology.
Nigeria will be a critical test case for the B3W initiative. As Africa’s largest economy and most populous nation, Nigeria is potentially a super-power of the future. With more children born in Nigeria every day than in the whole of Western Europe combined, its already 200 million-strong population could well double by 2050, becoming the world’s second largest democracy. Based on these demographics, it is often thought of as a future giant of the global economy. Given that the G7 sees itself as the leading alliance of democracies, it should be supporting Nigeria’s economic growth.
Infrastructure projects are crucial to Nigeria’s economic future. They have necessarily been at the heart of President Muhammadu Buhari’s policy agenda. A wave of infrastructure projects have been completed, from the Kaduna to Abuja rail service, to additional terminals at the Nnamdi Azikiwe International Airport in the capital Abuja, as well as the Port Harcourt International Airport.
The Nigerian government has sought to leverage a range of international investment to promote industrial and structural change. The ambition is to develop and grow the Nigerian economy, modernising for the global energy transition away from its reliance on the oil industry. In particular, the government has secured Chinese investment in supporting job creation, none more so than the Lagos – Ibadan railway line, a $1.5bn scheme built by the China Civil Engineering Construction Corporation (CCECC).
China’s Belt and Road initiative has targeted the economies of Africa. The ostensible goal of the BRI is to connect a broad range of geographical regions by way of construction projects, including transport and economic corridors, to better connect the world’s second largest economy with the rest of the world. From the early 2000s onwards, China’s role in Africa has grown rapidly in respect of trade, investment and the ﬁnancing of infrastructure projects. There are now more than 40 African countries signed up to memorandums of understanding with China. Given this level of ﬁnancial support and the consequential political inﬂuence that follows, it is hardly surprising that the G7 countries should want to emulate China’s success.
Too often in the past, investment from Europe or the United States has focussed on longer term ﬁnancial services. In contrast China and Chinese companies have invested in practical projects, including transport infrastructure and manufacturing, involving immediate beneﬁts to the countries concerned. African countries will therefore be looking to the B3W to follow and compete with the Chinese model of investment in critical infrastructure. Moreover, in regions where the G7 countries are already heavily involved, such as the Sahel, developing core infrastructure will be a vital component in ensuring the long-term political stability of the region.
This is the driving principle behind a 283km rail route between Nigeria and Niger commenced earlier this year, spearheaded by Nigeria’s Transport Minister and the Portuguese construction company, Mota-Engil – helping increase commercial activity in the region while aiming to establish Nigeria as the region’s central export hub.
Revitalising infrastructure links across West Africa and the Sahel is not only essential from a security standpoint, it is also an imperative for youthful population looking to develop and diversify their economic ambitions. Harnessing the potential of young people to play their part in promoting economic growth cannot be ignored. Cross-cutting collaboration between national governments and foreign investors is essential to ensure that Africa’s young demographic can access the full range of high quality public services that are currently lagging far behind those of the western world.
Lead by the United States, motivated as much by politics as economics, the G7 countries have now demonstrated a considerable appetite for investing in African infrastructure projects, providing a political and economic alternative to Chinese loans and investments. But if B3W is to be a success, both for the countries of the G7 and their prospective partners, it will have to be on more transparent and mutually beneﬁcial terms than China currently oﬀers. Given Nigeria’s growing global importance and scale of its challenges, the country represents a critical test case to determine whether the B3W can deliver on its promises.