Private Companies Can Now Construct Roads In Nigeria, See Why?

Over the years, Nigeria has been suffering from a huge infrastructure deficit.

Successive governments in Nigeria have always put up the excuse of insufficient resources to invest in building new or upgrading old infrastructures.

Some might ask: why has the private sector not been supportive of the government in building public infrastructure – especially roads?

Well, the answer is simple. These companies pay huge taxes to the government. These taxes are meant to be used by the government to build roads and other public infrastructure.

Naturally, after paying these huge taxes to the government, these private sector players would not be motivated for that sort of charity.

Thankfully, all that appears to have changed with some recent policies by the Federal Government.

It all started in 2012 when the ‘infrastructure-for-taxes’ provision of the Companies Income Tax Act (CITA), known as the “Exemption of Profits Order 2012” was signed into law by Goodluck Jonathan, Nigeria’s former president.

Plainly put, the order grants tax incentives to corporations that invest in public infrastructure.

Section 3, Paragraph 1 of the exemption order, reads:

“Any company that incurs expenditure on infrastructure or facilities of a public nature shall be entitled to an exemption from income tax of an additional thirty percent of the cost of the provision of the infrastructure or facilities in the assessment period in which the infrastructure or facilities were provided.”

Read also: Why Don’t Road Transport Unions Build or Repair Roads?

Based on this law, on June 19, 2017, President Mohammadu Buhari-led federal government signed an MoU with some private companies for the repair of Apapa-Wharf Road.

The companies include Dangote Group, Flour Mills Of Nigeria PLC. These companies funded the repair of the 4-Km road dual carriage road.

Also, in November 2016, The Dangote Group signed a contract with the Federal Government for the construction of a 42.5KM Obajana-Kabba Road in Kogi.

In 2017, the Federal government granted the Dangote group a 10-year tax relief for the purpose of reconstructing the 35-kilometer stretch of road in Lagos  – starting from Creek Road, Liverpool, all through to Marine beach to Mile 2 to Oshodi to Oworonshoki and to the Toll Gate). Apapa-Oworonshoki end of the Lagos-Ibadan expressway.

To further give impetus to the ‘infrastructure-for-taxes’ law, President Muhammadu Buhari signed a new Executive Order 007.

This Executive Order 007 (2019)  permits private companies to fund the construction of major road projects in the six geo-political zones of the country.

The Executive Order was signed on 25^th January 2019.

Companies that have keyed into this Federal Government road reconstruction policies for tax holidays include Dangote Group, Lafarge Africa Plc; Unilever Nigeria Plc; Flour Mills of Nigeria Plc; Nigeria LNG Limited; and China Road and Bridge Corporation Nigeria Limited.

These six (6) companies will be the driving force in the pilot phase of a scheme that will construct 19 roads covering 794.4km in 11 states across each of the six geo-political zones.