Nigeria’s Federal Government has appointed KPMG, auditors and tax advisers, as transaction advisers for the N15 trillion Infrastructure Corporation (InfraCorp), now scheduled to take off by the third quarter of this year.
InfraCorp, expected to help close the country’s huge infrastructure gap, is being put together by the Central Bank of Nigeria (CBN), Nigerian Sovereign Investment Authority (NSIA) and the African Finance Corporation (AFC), will not only unlock investments from local sources but also attract foreign private capital into the infrastructure space.
The CBN governor, Godwin Emefiele, who gave the updates during a virtual investors’ webinar organised by the Bureau of Public Enterprises (BPE), said authorities were pushing for InfraCorp because the government’s lean resources would hardly be enough to support infrastructure building in Africa’s largest economy.
It is estimated that Nigeria would need over N350 trillion to support infrastructure investment over the next 10 years.
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Analysts believe that if these investments are made, Nigeria would likely gain GDP growth rates of over 10 percent annually.
“But given the revenue position of the government, it will be difficult to support these investments using government revenue,” Emefiele said, saying harnessing available funds from the private sector is therefore vital for the infrastructure funding objectives to be met.
According to Emefiele, “This would however require viable public partnership arrangements that provide investors with bankable projects that are socially and economically beneficial while offering decent returns to investors.
“It is as a result of this position, that the CBN, working with key stakeholders such as the AFC and the NSIA secured the support of Mr President in setting up InfraCorp, which is an entity that will seek to raise private sector capital to support investments in key infrastructure in Nigeria.”
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The establishment of InfraCorp has generated a lot of interest from both local and international private sector fund managers who are keen to work with the promoters in deploying the much needed private sector capital, he said.
“Work has indeed attained an advanced stage and we have received the approval of the chairman of the Steering Committee, Vice President Yemi Osinbajo, for the appointment of KPMG as the transaction advisers.
“Also, only recently we obtained approval from asset managers. So, following the conclusion of these arrangements and other activities, I would like to assure us that InfraCorp is expected to begin full operation by the third quarter of 2021.
“We believe that through a partnership with the private sector, InfraCorp will be able to leverage close to N15 trillion over the coming years, which would help to close the gap on our infrastructure funding needs and would help to catalyse growth in other key sectors of our economy,” the CBN governor stated.
He also told the over 800 webinar participants that investment in the country’s rail and road infrastructure, power, manufacturing, ICT and agriculture were profitable choices, and areas with significant potential to transform the growth trajectory of our country.
Alex Okoh, director-general, BPE, said over the years, the Bureau had reformed over 234 state-owned enterprises and assets cutting across various sectors of the economy – banking, insurance, oil and gas, seaports and of course power.
He said the investors’ webinar was aimed at highlighting the huge investment opportunities being offered by the government’s reform and privatisation programme as captured in the Bureau’s 2021 Work Plan, which has over 36 projects and transactions across diverse sectors of the economy listed in it.
He said: “The Power Sector transactions should see the sale and concession of power generation assets that can potentially add about 3,300mw to the national power pool. The importance of power as an enabler for economic and industrial activities across all sectors of the economy continues to attract a strong focus and attention of the Federal Government.
“In the Health Sector, the reforms being undertaken by the Bureau will involve implementing initiatives, which will radically transform healthcare delivery across Nigeria.
“It is envisioned that this will improve the availability, accessibility, affordability and quality of healthcare services, with the ultimate objective of having a physically and emotionally healthy population.
“With regards to Industry and Trade, the planned concession of two of the Federal Government’s Free Trade Zones located in Calabar and Kano, is expected to generate annual savings of about N5 billion for the Federal Treasury and also increase export earnings from the two SEZs to about $3 billion over a period of 5 to 7 years.
“The impact of this would be to unlock significant resources for the government to invest in other critical infrastructure as well as other key sectors of the economy, creating job opportunities in the process.”
In his remarks, the representative of the Africa Development Bank (AfDB) acknowledged improvements in Nigeria’s business environment as indicated in the recent ease of doing business ranking – though more needed to be done to spur growth.
According to Okoh, critical investments are needed in Nigeria because it is Africa’s largest economy accounting for more than 10 percent of the Economic Community of West African States (ECOWAS) region’s economy.
“Improvements in Nigeria’s business environment will not only be beneficial to Nigerians but also the wider region and even continent and certainly advance the African Continental Free Trade Area,” he said.
He, however, highlighted existing challenges, especially with access to credit and paying taxes, but welcomed the efforts being done through CAMA, Finance Act and investors guide.
“Nigeria’s infrastructure deficit poses a major constraint to industrial development and national competitiveness. We urge the government to continue the course of the reforms to restructure the power sector,” he said.
He said estimates indicate that this constraint cost the country 4 percent of GDP and that given the amount needed to fix the infrastructure gap.
“The time is now more than ever to accelerate work and partnerships, particularly promoting public/private investment in infrastructure. We, therefore, welcome the establishment of InfraCorp.
“That is why the AfDB has been supporting Nigeria and other African countries to plug the infrastructure deficit through the development of both national and regional infrastructure in the energy sector, transport, among others,” he said.
Attracting private sector participation is critical for mobilising investable resources and ensuring sustainable operational maintenance of infrastructure, he noted.
To this end, he advised the government to put in place adequate frameworks that treat infrastructure as an asset class with a view to attracting institutional investors and also as an opportunity to optimise underperforming assets.
He noted that privatisation should therefore not be seen merely as a transaction but as an institutionalised mechanism with long-term perspectives to put the private sector as the main engine of growth.
Oscar Onyema, group CEO, Nigerian Exchange Group, who spoke on unlocking investment opportunities in Nigeria, said getting private participation in the public space adds significant value to various sectors of the economy.
