Government had fixed September 2021 as the month for the establishment of the N15 trillion Infrastructure Company aimed at closing Nigeria’s burgeoning infrastructure deficit. Ten months on and the company is yet to take off. All eyes are now on government especially the Central bank of Nigeria (CBN), which is the arrowhead of the project.
When, last year, the Central Bank of Nigerian (CBN) announced moves to establish the Infrastructure Development Company to address the country’s yawning infrastructure gap, not a few Nigerians hailed the move as the tonic for curing Nigeria’s infrastructure challenges. We share that sentiment.
The brief of the infrastructure company, it is learned, will be to leverage local and international funds for rebuilding of critical infrastructure across the country. According to reports, the company will be focused on Nigerians, will be co-owned by the CBN, the Africa Finance Corporation (AFC) and the Nigeria Sovereign Investment Authority (NSIA). It will be managed by an Independent Infrastructure Fund Manager (IIFM) that will mobilise local and foreign capital to support the Federal Government in building the transport infrastructure required to move agriculture and other products to processors, raw materials to factories, and finished goods to markets.
To get a sense of Nigeria’s gaping infrastructure deficit, the Minister of Finance once said that Nigeria needs an estimated N36 trillion annually for the next 30 years to solve Nigeria’s infrastructure problem. Clearly, the sum spent by the government annually on capital projects is significantly short of the sum needed to close the gap. In the 2020 budget for instance, only about N2.9 trillion was budgeted. Worse still, less than N1 trillion was been released for the purpose, which perpetuates an old problem of budget underperformance, which was 31 per cent in the last budget.
Unfortunately, the above development puts public investment in infrastructure at no more than 9.1 percent of GDP – a level of investment that failed to keep pace with capital replacement costs and therefore contributed to deterioration of the country’s infrastructure. The situation has been a source of concern not only within government that has the mandate for developing the economy but also among the global development community.
According to the African Development Bank (AfDB) in a 2010 study, there is widespread agreement that the inadequate physical infrastructure of the country is one of the major constraints to sustained and broad-based strong economic growth. Addressing these challenges, the AfDB notes, will require a substantially larger annual level of investment in infrastructure, a significant increase in annual allocations for routine and periodic maintenance to en- sure reliable infrastructure services, and increased attention to the institutional arrangements that support the infrastructure network of the country and the related services. Recent studies suggest that if the infrastructure endowment of Nigeria were raised to that of the Africa region’s middle income countries, it could boost annual GDP growth by about four percentage points.
By our reckoning, establishing the infrastructure company will amount to not only reversing the aforementioned situation but it will also be major leap in our quest to figure among the best. But the company may be severely limited if the management fail to understand the urgency and scale of the infrastructure problem as already broached above. Infrastructure development and building is a serious business that requires steep understanding of the risk-return framework and therefore would require a management that fully understand deal making to the advantage and eternal prosperity of the country. Infrastructure means jobs, economic growth and development if handled right.
On that note, we urge government to speedily fulfill its promise of making operation, the infrastructure company that is sure to accelerate economic growth and development.
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