The federal ministry of water resources has released its medium to long term strategies in the form of a roadmap. This is a good step forward given that over the past several years, Nigeria’s hydro sector has been neglected. The under-investment within the sector is reflected in the national accounts produced by the NBS. Last year, the sector which is classified as water supply, sewerage and waste management, contributed just 0.2% to total GDP yet managed to grow by 9.3% y/y amid the macroeconomic challenges.
Nigeria boasts 250bn cubic metres of freshwater (both surface and ground). This is sufficient for industrial, agricultural, domestic, hydropower and recreational usage. However, the country is ranked as an economic water scarce country.
According to UNICEF, as at four years ago, 38% of Nigerians lacked access to safe drinking water, and over 60% lacked access to improved sanitation, meanwhile open defecation rates stood at 28.5%. This poses as a public health risk. Industry sources suggest that the economic impact of poor sanitation and hygiene costs to Nigeria is about 1.3% of gross domestic product.
Historically, this sector has not been a key beneficiary of the FGN’s public funds. Last year, the ministry of water resources was allocated N53.3bn (less than 1% of the total budget). Given the number of projects under its purview, the ministry secured N46.1bn from the allocation for capital expenditure. These projects include irrigation, the rehabilitation and construction of dams and solar powered borehole installations.
In developed countries, the motivation for advanced wastewater treatment is usually to sustain environmental quality or to supply alternative water sources during periods of water scarcity. In developing countries, the release of untreated wastewater remains common practice. On average, high-income countries treat about 70% of the municipal and industrial wastewater generated. That ratio drops to 38% in upper middle-income countries and to 28% in lower middle-income countries. In low-income countries, only 8% undergoes treatment of any kind.
Macro Economist & Fixed Income Analyst at FBN Capital
Source: The Guardian, 3 April, 2017.
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