In the next 22 years, Nigeria’s Infrastructure financing needs will grow to $3trillion, the African Development Bank (AfDB) has projected.
Consequent upon this projection, Nigeria would no longer rely on its yearly budgets to fund infrastructure development, hence the need for partnership with investors through a public private partnership (PPP) to attract private funds to deliver such projects.
These were the assumptions by the AfDB Senior Director, Nigerian Country Office, Ebrima Faal, in Abuja, Tuesday, at the Bank’s roadshow and interactive session with key agencies of the Nigerian Government on the preparation of some projects in the country to make them bankable and attractive to investors.
This comes ahead of the Bank’s African Investment Forum (AIF), billed for Johannesburg, South Africa, in November.
Already, some projects including the Abuja Integrated infrastructure project (satellite towns and the Bus Rapid Transit); the Eko Atlantic City Project; and the GFD Gas Commercialisation project were selected for preparation and exhibition at the Investment Forum.
Faal observed that over the last decade, and despite impressive growth rates in most of the continent, Africa’s infrastructure needs remain formidable, with annual financing gap between $130 and $107billion annually.
Commenting on Nigeria’s infrastructure, he said: “Cumulative financing needs are estimated to reach $3trillion by 2044, or about $100billion annually. This is all happening at a time when public sector finances are extremely pressured.”
Through the AIF, described as Africa’s own investment marketplace for accelerated economic transformation, AfDB is working with multilateral institutions, the private sector, and governments, to help Nigeria and other African countries to develop investment-ready projects for investors, fund managers, and others managing substantial assets.
The Bank and its partners will also screen and enhance bankable projects, attract co-investors, and facilitate transactions to close Africa’s investment gaps, estimated at $200billion to $ 1.2trillion annually.
Infrastructure financing needs alone are estimated at $130billion to $170billion a year.
Considering the huge and rising cost of infrastructure financing, Faal explained that Nigeria, like most African countries would not be able to undertake the task of infrastructure financing because of the falling commodity prices for which they rely on revenue, hence the need to prepare and make them investible.
His words: “We are assembled here today at a time when Nigeria and African economies continue to gather momentum, notwithstanding the recent cyclical downturn in commodity markets; stagnation and recession in some of the continent’s larger economies.
“Having reversed decades of decline, African countries must now confront the issues around the quality and sustainability of growth.
With population growth as a stress factor for infrastructure, it means now, more than ever, that delivery of infrastructure projects in Africa needs to be more efficient.
“Further, to meet this demand, infrastructure projects will increasingly become more complex both in planning and construction.
This is a situation that itself calls for greater and closer collaboration between the Bank and the supply chain; long-term partnering to harness collective capacities that meet the size and pace of demand, he also said.
He announced that the Bank and its partners have in place a number of financial and advisory products that help ease the risk profile of a project and host country, pointing out that it was time for the Continent to change its infrastructure financing strategy.
“There is therefore a critical need to change the current funding mix and create partnerships to finance infrastructure and other projects in Africa.
This is a shift away from government as the main financier of critical infrastructure, towards smarter partnerships with the Private Sector and other development partners, including emerging markets, and private equity capital looking for yields in Africa’s lucrative infrastructure asset class,” he submitted further.
The roadshow was well attended, with the Nigerian Government core infrastructure delivery agencies like the Infrastructure Concession and Regulatory Commission (ICRC); the Nigerian Sovereign Investment Authority (NSIA); the Economic Recovery and Growth Plan (ERGP) all presenting investment opportunities in the country.