Developing an Economic Impact Assessment Methodology for Infrastructure Projects in Nigeria

Infrastructure projects generate direct, indirect, and induced economic effects that are rarely quantified systematically in Nigerian project appraisal, and developing a professional impact assessment methodology enables more evidence-based infrastructure investment decisions. This study developed an economic impact assessment methodology for large-scale infrastructure projects in Nigeria, applicable to roads, power, ports, and industrial estates. A professional methodology development approach was applied, drawing on review of international infrastructure economic impact frameworks (World Bank, ADB, and UK DfT methodologies), consultations with 20 infrastructure economists and government project appraisal officers, and piloting of the methodology on three completed infrastructure projects. The methodology developed specifies a three-tier impact analysis: direct construction and operational employment and income effects, indirect supply chain effects using Nigerian input-output coefficients, and induced consumption effects using household income multipliers. Benefit-cost ratio computation procedures, sensitivity analysis requirements, and risk adjustment guidelines are provided. Expert review by ten project economics and infrastructure finance specialists confirmed the methodology's technical soundness. Recommendations include the Federal Ministry of Finance mandating the methodology for all projects above N5 billion requiring National Economic Council approval, training OAGF project appraisal officers in its application, and establishing a national infrastructure project economic impact database.

Keywords: economic impact assessment, infrastructure projects, Nigeria, benefit-cost analysis, project appraisal