Nigeria: Growth with Challenges

By Kelley Hunsberger

Country moves away from oil dependency; skilled project managers needed.

PM Network January 2016

Nigeria is in a tough spot.

With Africa’s largest population and economy, the country’s leaders have a smart strategic goal that could unlock huge project potential: building an economy less dependent on oil. But progress has been stymied by a handful of frustrating factors, including public-sector corruption, security threats and rock-bottom oil prices that have choked off funding for efforts to diversify the economy.

President Muhammadu Buhari, elected in May, wants to reverse two of those problems. His promises to eradicate government corruption and dismantle a major terrorist group have fostered hope of political stability that could spur the confidence of both domestic and foreign project sponsors. Meanwhile, although Nigeria’s annual economic growth dropped from 6.5 percent to 2.4 percent in the second quarter of 2015, according to the Nigerian National Bureau of Statistics, hints of a brighter future aren’t hard to find.

For instance, in May the first phase of construction was completed for the country’s first smart mall. The US$300 million project in Aba, Nigeria would include at least 5,800 shops, and all facilities will also be connected to an e-commerce hub that allows customers to purchase items online when they are offsite. The second phase of construction began in June.

But there’s no getting around the reality of very low oil prices.

“There are many emerging markets both in the formal and informal sectors—informal meaning outside government purview—which will flourish as soon as the recent poor fortunes in the oil industry get reversed,” says Kunle Adebajo, CEO, Ove Arup & Partners Nigeria Ltd., Lagos, Nigeria.

“As the economy becomes stronger and the private sector becomes more robust, there will be an increase in the need for better project management.”
—Abiye Kalaiwo, PMP, United States Agency for International Development, Abuja, Nigeri

As it charts a more stable future, Nigeria will need skilled project managers to oversee transformative initiatives, says Abiye Kalaiwo, PMP, program manager, United States Agency for International Development (USAID), Abuja, Nigeria. Mr. Kalaiwo believes such project discipline can help the country realize its potential in sectors such as IT, healthcare, transportation and renewable energy.

“Nigeria is a developing country with all the credentials for an exponential growth in development, trade and commerce,” Mr. Kalaiwo says. “As the economy becomes stronger and the private sector becomes more robust, there will be an increase in the need for better project management.”

Crude Reality

When the price of oil ebbs, so does Nigeria’s economy. The oil industry accounts for more than 90 percent of the country’s foreign exchange revenues and about 75 percent of government revenues.

“Nigeria is investing more in projects, however, some of the projects are witnessing setbacks due to the fall in oil price as well as change in government,” says Ayodeji Rex Abitogun, PMI-SP, PMP, IT management consultant, Management Edge, Abuja, Nigeria. “It’s a bit challenging to fund capital projects at the moment.”

For instance, he says most construction projects in the country, including the Auchi-Benin express road and the Lagos-Ibadan expressway, are on hold. Conversely, there’s hope that this year’s national census could become a robust IT project that incorporates digital mapping and geographical information systems, Mr. Abitogun says.

But even after oil prices recover, Nigeria also must overcome other factors that threaten to derail existing projects or dissuade project sponsors from giving the green light. Corruption is a major problem. In October, the country’s former petroleum minister was arrested on suspicion of embezzling billions of dollars from the state-owned oil company, the Nigerian National Petroleum Corp.

“Political corruption, regulation and the low price of oil have inhibited project investment,” says J. Eric Maier, PMP, project director at engineering and systems integration firm Intech Process Automation, Port Harcourt, Nigeria. “There are a lot of unfinished projects because companies cannot get any attractive ROI.”

But President Buhari’s efforts to clean up corruption are promising for projects in the country, Mr. Abitogun says.

“The anti-corruption crusade of the present-day government will lead to a lot of manual processes in government becoming automated. Citizens are demanding transparency and accountability from the government,” he says.

President Buhari also has vowed to stem horrific violence by Islamist militant group Boko Haram. The group’s terrorist attacks not only threaten citizens; they are also a risk for which project managers must account, because they have the potential to delay or destroy projects. However, Nigeria’s military says the group no longer controls a large section of northeast Nigeria and largely is confined to the Sambisa Forest.

“Where there’s no security, there’s no progress,” Mr. Abitogun says. “Containing Boko Haram will ensure safety on project sites. Project managers will be able to go to the site without fear of being attacked.”

Under Development

Public safety and more government revenue are necessary but not sufficient for Nigeria to reinvent itself, say project practitioners in the country. It also needs more mature project management practices—they’re currently “in their infancy,” Mr. Kalaiwo says. “Awareness that there is a better way to manage projects is low,” he says. Poor risk management strategies and cost management techniques, and problems with scope and schedule are common.

“While some sectors like information technology and construction are gaining traction with project management, several other sectors still have a long way to go,” he says.

“While it’s true that there are many challenges to doing business here, on balance things can only get better with the expected growth rate.”
—Kunle Adebajo, Ove Arup & Partners Nigeria Ltd., Lagos, Nigeria
 

For instance, healthcare. Nigeria’s ailing healthcare system is one of the world’s worst, according to the World Health Organization. Mr. Kalaiwo says that the disconnect between Nigerians’ glaring health needs and a lack of adequate facilities is in part due to “several decades of poor healthcare project management. In my experience, risk, stakeholder, time, quality and especially cost management are the key areas where healthcare projects are hardest hit.”

Other sectors in need of skilled project practitioners are telecommunications and IT, as well as the food and beverage and hospitality industries, says Mr. Adebajo. These sectors are either flourishing or poised to do so. Nigeria has 51 new hotels in the works, according to the Hotel Chain Development Pipelines in Africa 2015, an annual report created by the W Hospitality Group.

But regardless of sector, in Mr. Abitogun’s experience most projects fail due to inadequate requirements elicitation, poor scoping and ineffective stakeholder management.

“Project managers will need to acquire more skills in the area of requirements gathering, process documentation, and financial and stakeholder management,” says Mr. Abitogun.

If project managers could upgrade their skills in those areas, they could help sponsors steer organizations better.

“Most key stakeholders, especially in the public sector, do not have the knowledge necessary to deliver on projects,” Mr. Abitogun says. “Some don’t know what they want to achieve on a project—they want the project because they think it’s ‘nice to have.’ Project managers will need stakeholder management skills to carry all parties along, especially in a country with diverse cultural backgrounds.”

Project professionals also might need to spend time educating the country about the profession—largely by being on the ground advocating for themselves and the value of project management.

“People do not see the benefits in the adoption of standard project management practice when implementing projects. Some see it as a waste of time and effort,” Mr. Abitogun says. “There is interest in project management from the newer generation in the private sector, because they understand and have the education. The older generations, the people in the public sector, have yet to see value in project management.”

Once Nigeria fully appreciates the benefits of project management, the country will be primed to flourish—and broaden its project horizons, Mr. Adebajo says. “While it’s true that there are many challenges to doing business here, on balance things can only get better with the expected growth rate,” he says. “With the change that the new government is promoting, it’s widely accepted that things will get much better. It is clear that the country has what it takes to really take off.”

Practitioner Perspective

We asked practitioners: What skills or training help project managers stand out in Nigeria today?

“Be very savvy with practical skills, particularly in areas like risk, time, stakeholders and especially cost management. Most of the major project failures in recent history in Nigeria [have problems in] these areas.”
—Abiye Kalaiwo, PMP, program manager, United States Agency for International Development

“Be extremely versatile and adaptable to changes. Soft skills are also essential together with a good understanding of how the profession works here.”
—Kunle Adebajo, CEO, Ove Arup & Partners Nigeria Ltd.

“Requirements gathering, process documentation, and financial and stakeholder management. Most key stakeholders especially in the public sector do not have prerequisite knowledge necessary to deliver on projects.”
—Adyodeji Rex Abitogun, PMI-SP, PMP, IT management consultant, managing partner, Management Edge Ltd.

Project Horizon

There’s more to Nigeria than oil. These three initiatives showcase Nigeria’s potential for a brighter future.

Next-Gen Energy Sources

In an attempt to increase Nigeria’s power generation capacity, the United Nations Industrial Development Organization announced in September it would spend US$2.6 billion for the development of small hydropower plants in Nigeria. About 20 such plants could be built as part of the program.

New City by the Sea

Pitched as Africa’s answer to Dubai, Eko Atlantic is a new city being built on 10 square kilometers (3.9 square miles) of reclaimed land off the coast of Lagos. The multibillion U.S. dollar project, which is a public-private partnership with local and federal governments, aims to attract multinational corporations to set up shop and become home to as many as 250,000 people. As much as 90 percent of the infrastructure was scheduled to be completed by the end of 2015, and the city could welcome its first residents this year.

Shipping News

Nigeria’s first major shipyard will be a US$1.5 billion project that will take four years to build. The shipyard, which would be the size of 185 football fields, would make the country a hub for ships and increase its ability to provide repairs. Although it could be used to transport up to 2.5 million barrels of crude oil per day, the shipyard could handle products from other sectors.

Originally Published in the January 2016 PM Network