Infrastructure gap remains a critical bottleneck that continues to undermine Nigeria’s economic potential.
Nigeria has failed over the years to invest in its critical infrastructures while the few available ones are in a deplorable state as a result of the poor maintenance culture and the age-long corruption in the country.
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This has affected the growth of the economy, leading to high cost of living, unemployment, insecurity, low foreign direct investment, poverty, low life expectancy among others.
Underscoring the deficit in infrastructure, President Muhammadu Buhari, during a high-level meeting at Glasgow to woo foreign investors, said Nigeria required the sum of $1.5 trillion in 10 years to close the gap.
This is a huge capital that the government alone cannot provide. Nigeria’s entire 2022 budget titled “Budget of Economic Growth and Sustainability” is valued at N17.126 trillion (approximately $41bn).
Experts have noted that this infrastructure deficit can only be fixed through Public Private Partnership, which has proved successful in countries where it has been applied.
Vice President Yemi Osinbajo underscored the important role the private sector would play if Nigeria is to address its infrastructural deficit, which he said would require at least $3 trillion in the next 30 years, according to the 2014 National Integrated Infrastructure Master Plan (NIMP).
“It is clear that this deficit can only be made up by private investment. The private sector is 92 per cent of GDP, while the public sector is mere eight per cent. So, the synergy between the public and private sectors through Public-Private Partnerships (PPP) is the realistic solution,” he said.
The 2014 NIMP referenced by Prof. Osinbajo estimates a yearly investment of $100 billion or a total spending outlay of $3 trillion over 30 years to bridge the country’s infrastructure gap. To achieve this plan and stand a chance of bridging the gap, Nigeria would need to increase its infrastructure funding to seven per cent of Gross Domestic Product, GDP, but like most national plans, the implementation remains a challenge.
Osinbajo added that the traditional method of building infrastructure through budgetary allocations is inadequate and set to become harder because of increasingly limited fiscal space.
“It seems to me to be quite clear that the financial outlay and management capability required for infrastructural development and service delivery outstrip the financial and technical resources available to the government,” he said.
So, stakeholders and analysts received with joy the announcement by the Governor of the Central Bank of Nigeria, Godwin Emefiele, last week, that the N15-trillion Infrastructural Corporation of Nigeria Limited (InfraCorp) launched by President Buhari in 2020 is now open for business with the signing of the Term Sheet between InfraCorp and the Independent Asset Managers to develop the country’s infrastructure.
The announcement came after 18 months of structuring and stakeholder consultations by the Promoters – Central Bank of Nigeria (CBN), Africa Finance Corporation (AFC) and the Nigerian Sovereign Investment Authority (NSIA).
InfraCorp was launched in 2020 with an initial seed capital from the promoters of one trillion naira ($2.5 billion) and aims to raise thrice as much in private capital over the next three years, and up to $37 billion for infrastructure investments in Africa’s largest economy by 2030. InfraCorp’s core mandate is to tackle Nigeria’s infrastructure deficit and generate a growth multiplier effect across critical sectors.
By supporting project development, financial structuring, and private-capital mobilisation, InfraCorp will help to combat issues of underemployment and underinvestment in critical nation building assets.
“There is an infrastructure deficit in the public and private sector and we would like to see that we play our part at this time to support the effort of the government and that of the private sector to see to whatever can be done to develop the infrastructure of Nigeria.
“We will go straight into execution work because Nigeria very badly needs to develop its infrastructure,” noted the apex bank governor, who is also the chairman of the Board of InfraCorp.
Emefiele also announced that to demonstrate the commitment of government and the promoters to its success, a seasoned infrastructure and finance professional, Dr Lazarus Angbazo, was appointed as the CEO and Managing Director of InfraCorp. Dr Angbazo was most recently Partner, Head of Portfolio Operations West Africa, at Helios Investments Partners, and former President and CEO of General Electric (GE) Nigeria.
The Infrastructure Asset Managers are the AAA Consortium, Chapel Hill Denham, Africa Infrastructure Investment Managers here in Nigeria, and Sanlam Infraworks.
InfraCorp, which operates from the Capital City, Abuja, and Nigeria’s commercial hub, Lagos, will support and enable the fund managers to mobilise fundraising and investments of projects across the critical focus sectors – Energy, industrial, agricultural, telecommunications, technology, transport, logistics, and social infrastructure.
InfraCorp has initiated selection of its first set of projects – the Lagos-Ibadan Expressway, Abuja-Kano Road and the second Niger Bridge. These projects, Emefiele said, are economically viable and would be tolled when completed. He recalled that the Lagos-Benin Expressway was of international standard when it was tolled in the 1980s.
However, stakeholders are urging government and other promoters to adhere to policy frameworks that will enhance its success and suitability in Nigeria, especially considering that a good percentage of the resources would be raised through pension funds, banking industry and Eurobonds.
The President and CEO of Africa Finance Corporation (AFC), Mr Samaila Zubairu, at a recent media briefing in Lagos, urged all tiers of government to provide protection for private sector funding in concessional projects to attract more investors.
Zubairu said Nigeria’s huge infrastructure gap could be closed within a short period if governments offered protection for concession agreements in the construction and energy sectors.
He advised governments to focus on health, security, education, water, sanitation and other social services while the private sector would do better managing transportation and energy sectors.
To allay fears of the private sector, Daily Trust gathered that the Board of InfraCorp, at its inaugural meeting in February, agreed that it will be governed by a suite of governance documentation to ensure a world class governance structure to position it to attract the financing required to achieve its mandate.
There is no gainsaying that modern and efficient infrastructure is the bedrock of developed economies all over the world as it fosters industrial development, provides employment opportunities and serves as a catalyst for growth among others.
Experts believe that if Nigeria can get it right with InfraCorp, it might signal the dawn of a new infrastructural revolution that will position it as the true giant of Africa and an emerging force in the comity of nations.
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