Why private companies once kept away from infrastructure construction are now allowed to build roads in Nigeria?

05/30/2019

Posted by: Oluwaseun Solomon

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Many people don’t know that private companies are not really allowed to construct roads in Nigeria in the past. But now they can and here is why!

1. The past situation of road construction in Nigeria

Naijauto.com wouldn’t be wrong to claim that over 80% of all major Nigerian roads are in terrible conditions.

For many years now, Nigeria as a country has suffered an infrastructure deficit in a huge way. The country has always seen successive governments that put up different excuses claiming there are insufficient resources for them to build new infrastructures or upgrade old ones.

To worsen the problem, in the past, private companies were not allowed to build roads, which made many people confused.

Well, the fact is: the Nigerian government collects huge taxes from these private companies under the context of building the nation with it. All taxes paid to the government are meant to be used for building and providing all the necessary infrastructures in the country.

Sincerely, it is totally understandable that private sectors would naturally not be motivated to still invest further in public infrastructures after paying such huge taxes to the government for the same purpose.

constructing-road-in-nigeria

Private companies can now take over the construction of major roads in Nigeria based on the new Exemption order

>>> Private companies will help to construct roads in 11 states: President Buhari signs order to construct roads of 794km in 11 states

2. Private companies are now allowed to build roads in Nigeria

However, the whole nation can be thankful now for the recently reviewed and added policies by the Nigerian Federal Government board addressing this issue.

This move had started since way back in the year 2012 that the “Exemption of Profits Order 2012” which is the “infrastructure-for-taxes” provision within the CITA (Companies Income Tax Act) that was actually signed by the president, Goodluck Jonathan.

To simply put, the policy/order grants all private corporations tax incentives when they invest in Nigeria public infrastructures.

Specifically, this exemption order’s Section 3, Paragraph 1 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.”

buhari-signing-contract

The President has signed order to construct roads across states

Many of the big Nigerian private owned companies like Flour Mills Nigeria PLC, Lafarge Africa, Nigeria LNG, Unilever Nigeria, China road and Dangote Group have leveraged on this exemption order since then and have been reconstructing many roads in Nigeria till date. Some of these projects include Apapa-Wharf Road in Lagos and Obajana-Kabba main road in Kogi state.

To even give further impetus to this “infrastructure-for-taxes” law/exemption order, President Buhari has signed a “New Executive Order 007”.

This newly signed 2019 Executive Order now permits any private company to fund construction projects of major roads in any of Nigeria’s 6 geo-political zones.

This new order has been signed on the 25th of January 2019.

>>> Naijauto.com offers latest news in the auto industry, fun car stories, traffic updates and handy car maintenance tips!

Oluwaseun Solomon
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Oluwaseun Solomon

Oluwaseun Solomon

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Oluwaseun Solomon is a prolific and diligent automobile writer at Naijauto.com. He's also an experienced digital marketer and a creative multimedia developer that specializes in video editing. He currently contributes informative and easy to read articles on topics covering transportation, traffic updates, auto industry updates, and different car reviews.
When Solomon is not writing, you will either find him composing music, editing videos or simply enjoying YouTube "TEDx Talk" videos with a chilled drink :)

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