Domestic capital seen as missing piece in Nigeria’s infrastructure puzzle

Nigeria will need to mobilise sufficient domestic capital to make a dent in bridging a gaping infrastructure deficit that has stifled private investments and held back economic growth in Africa’s most populous nation.

The country’s challenges with foreign exchange have made attracting foreign capital into infrastructure a tad difficult but domestic capital provides a leeway, according to experts who spoke at the Chapel Hill Denham Investing in Development conference.

“In a world running short of private capital, there are lots of untapped potentials in the Nigeria domestic market that can fund bankable infrastructure projects,” Phil Southwell, partner at Chapel Hill Denham said at the event on Wednesday.

Lazarus Angbazo, the CEO of the Infrastructure Corporation of Nigeria (InfraCo) said there is no idle foreign capital that can fix Nigeria’s infrastructure gap estimated at N36 trillion yearly for the next 30 years.

“We need to crowd in capital with structures to attract domestic investors, We need to develop local support for bankable infrastructure projects,” Angbazo said.

Mobilizing domestic capital also lays down a marker that will be crucial in attracting foreign capital, according to Andrew Alli, former CEO of the Africa Finance Corporation (AFC).

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“There is a strong need to mobilise local investment instruments for infrastructure development,” Alli said.

“Nigeria needs to mobilise local investments for infrastructure funding; this has an indirect way of attracting limited foreign investment,” Alli said.

He added, “By putting your own money into it, it attracts foreign investors and sets the tone of the investment.”

He noted that the current federal government’s pattern of seeking local investment in dollars will discourage locals from investing.

“Why is the government selling its assets in dollars to local investors,” Alli asked.

“If your interest rate is lower than inflation rate, it discourages people from investing into your country,” Alli explained.

Karl Toriola, the CEO of MTN said the domestic telecom sector has what it takes to continue delivering double-digit growth that will help lift Africa’s biggest economy despite macroeconomic headwinds.

“It’s being a challenging macroeconomic environment, nevertheless I believe in the entrepreneurial skills of our young population to deliver creative solutions that will fix infrastructure gap,” Toriola said.

He added, “Our youths are building business models that are innovative and creative that will make firms like MTN look conservative.”