Columnist Chido Nwakanma explains why he’s awaiting tech giant MTN action on the pledge to rebuild the Enugu-Onitsha highway in exchange for tax credits.
I have since bought a new MTN SIM for my tablet in appreciation!
The Anambra end of the Enugu-Onitsha Expressway depicts a state of hopelessness and zero presence of any development, not to mention the “next level” type. Motorists jump off what used to be the road and enter as many bush paths as they can find solid ground to navigate. Amid this suffering, there are no fewer than eight police and army checkpoints from Ninth Mile, contributing to the chaos and frustration.
Road users and citizens of both Anambra and Enugu States, primarily, now pin their hopes on the number one telecom services provider MTN Nigeria Telecommunications Limited. MTN has the approval of the Federal Government to rebuild the 110 kilometres Enugu-Onitsha Road in exchange for tax credits. I have since bought a new MTN SIM for my tablet in appreciation!
Enugu-Onitsha Expressway is one of about 12 road projects listed under the Infrastructure Tax Credit Scheme. There are two projects in the entire South-East.
An interesting one is the construction of the Umueme Village Road in Obingwa Local Government, Via Glass Force Road, Off Okpu Umuobo, Aba, Abia State. This location is the home of GZI Industries Limited, a company with a presence in Nigeria and South Africa. GZI manufactures beverage cans for various brands. The road is 3.7kilometres.
Many famous roads feature in the Infrastructure Tax Credit Scheme. They are popular because of their perceived enhanced materials and quality.
Roads under the scheme include Apapa-Oworonshoki-Ojota Road, for which Dangote Industries got a tax credit certificate and are using to showcase their capability in road construction. Dangote Cement Plc also got a tax credit for the Lokoja-Obajana-Kabba road that connects Kogi and Kwara States. Dangote Cement got tax credit worth N22.3 billion for both roads. Dangote Group will also construct a deep seaport road through Epe to Sagamu-Benin; and the Kaaba-Ekiti boundary.
Oniru Road in Victoria Island, Lagos, built by Access Bank, also drew on the tax credit. Then there is the massive paradigm-changing Bodo-Bonny Road and bridges that the NLNG is building to link the islands of Bonny and Opobo by road for the first time. The road costs N120 billion, is 39.7km and traverses Bodo in Ogoni land, Andoni, Opobo and Bonny. It has 14 bridges, with Julius Berger Nigeria Plc as the main contractor.
Transcorp Group has tax credit to construct the 13.5 km Oyigbo-Izuoma-Mirinwayi-Oklama-Afam Road in Rivers State. At the same time, Bua Group took responsibility for the Bode-Saadu-Lafiagi Road and the Eyenkorin Road and Bridge in Ilorin, Kwara State. It will construct Okura Road, which links the Benin Republic with Osun State.
Mainstreet Energy will tackle the Malando-Garin Baka-Ngwaski Road and the rehabilitation of Mokwa-Nasarawa Road.
MTN Nigeria CEO Karl Toriola announced in August as they rolled out plans for the twentieth anniversary the approval of the Federal Government for it to undertake the Enugu-Onitsha expressway. Toriola said, “Conversations in this regard have already commenced, and further announcements will be made in due course.”
Dear Mr Toriola, the South-East urges that the due course should be now. More significantly, it would be a great Christmas/New Year 2022 gift to the region if MTN would announce deployment to and commencement of work on the Enugu-Onitsha expressway this Yuletide.
I was yet to get a revert to my correspondence to GZI Limited on their website seeking to know when they will commence work on the road in Aba at press time.
Game-Changer?
Awaiting MTN action on Enugu-Onitsha Expressway
The Road Infrastructure Tax Credit (RITC) Scheme could be a game-changer for the country’s construction and management of roads. It represents an opportunity for the South-East.
The Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme would encourage Public-Private Partnership intervention in the construction/refurbishment of road infrastructure projects in Nigeria. Participants provide the funds for the construction/refurbishment projects and, in exchange, recoup the funds provided as a credit against the Companies Income Tax they would pay. In other words, tax for road cash.
President Muhammadu Buhari signed Executive Order No 007 authorising the scheme on 25 January 2019. It is for an initial ten years.
Eligible roads are those the President approves based on the recommendation of the Minister of Finance and published in the Official Gazette of Nigeria.
Those who may participate are companies or corporations, excluding sole proprietorships, established under the Companies and Allied Matters Act, 2020. Others are companies operating through a special purpose vehicle (SPV) registered by a fund manager registered with the Securities and Exchange Commission (“the SEC”). Such companies would be set up solely as an infrastructure fund, then institutional investors such as pension fund administrators, collective investment schemes and investment banks.
There are incentives for companies in rural or disadvantaged areas to also invest in infrastructure for tax credits. A company that provides electricity, water or tarred roads can claim capital expenditure in a rural location without government facilities. The claim would be 100% where there are no facilities, 50% where there is no electricity, 30% where there is no water and 15% where there are no tarred roads.
To participate, companies must register and ensure certification by the Committee as a Participant or representative of Participant, get the Committee to certify the project cost, and show evidence of the project’s economic viability. The project must be cost-efficient and capable of completion within 12 to 48 months.
Participating companies get benefits of tax credits against their future Companies Income Tax up to the approved project cost and a single non-taxable uplift at the prevailing Central Bank of Nigeria Monetary Policy Rate plus 2% of the Project Cost. According to EY, an advisory firm, “Furthermore, the Executive Order provides that the tax credit may qualify as an asset in a Participant’s or Beneficiary’s financial records and will have to comply with International Financial Reporting Standards.”
Participating firms also get tremendous goodwill from the Corporate Social Responsibility angle. Communities and states will applaud. The downside is that the tax credit going directly to companies from the Federal Government means that States and Local Governments lose 47 per cent share of tax revenue. Companies should deploy these funds to projects under supervision than when the money disappears from the coffers of the federal, state and local governments and citizens suffer from deplorable roads.
RITC and the South-East
Awaiting MTN action on Enugu-Onitsha Expressway
Will the South-East take advantage of RITC? RITC seems ready-made for the land of self-help. The people who readily provided infrastructure for no other benefit than the spirit of the community can now get firms in the area to benefit in tax credit, social license and goodwill.
I expect that companies in the South-East will be plentiful on the list of the second round of approved participants. It should not be like the Central Bank interventions where the South-East lagged.
A significant challenge will be if the region has a critical mass of companies with a standard corporate governance regimen to meet the requirements. Put another way, are there enough companies with the needed paperwork and documentation in the South-East to take on this scheme for both federal and rural roads? The guidelines clarify that the sole proprietorship model predominant in our region will not work with this scheme.
Even so, companies in the region should rise to the challenge. Nigerian Breweries, with its many arteries in the area, should take on a road. As should some of the evolving indigenous firms.
Meanwhile, we await MTN earnestly.
Awaiting MTN action on Enugu-Onitsha Expressway
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