Nigeria is to make another push for a major public-private initiative aimed at rebuilding its derelict infrastructure and generating badly needed jobs in Africa’s largest economy. The innovative plan is to be crystallised via a company InfraCo which has been seeded with N1trn in equity capital to give it a good chance of success, BusinessDay has learnt.
The government said in a statehouse statement Friday the initiative has been approved by President Muhammadu Buhari who had asked his Vice President to lead the steering committee.
InfraCo as the company shall be called, will have a board to be chaired by the Governor of the central bank and the board shall draw membership from among the Nigerian Governors Forum, the Ministry of Finance, Budget and National Planning, the Managing Director of the Nigerian Sovereign Investment Authority, the President of the Africa Finance Corporation, and will also consist of three well-selected independent directors.
Infra-Co whose equity should grow over time to N15trn will be one of the premier infrastructure finance entities in Africa and will be wholly dedicated to Nigerian infrastructural development.
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Documents seen by BusinessDay show that the company evolved from concepts and representations by the National Economic Council and the Central Bank and the NSIA.
The initial seed capital for the entity will come from the Central Bank of Nigeria, the Nigerian Sovereign Investment Authority, NSIA, and the Africa Finance Corporation.
To address Nigeria’s infrastructure deficit, the government continues to explore innovative options including through financing initiatives such as the Presidential Infrastructure Development Fund (PIDF) designed to cater for the 2nd Niger Bridge and the Kano Abuja Road and other projects.
There is also the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme which for example is being used for the funding of the Bodo-Bonny Road (with NLNG).
Infra-Co will finance public asset development, rehabilitation and reconstruction as well as invest in cutting edge infrastructure projects for Roads, Rail, Power and other key sectors.
Analysts believe that well-structured funding deals should be able to attract investment by the Pension fund managers which have been yearning for credible infrastructure vehicles capable of providing security and return for their investment.
While the assets do not have to be sold, they will be placed under management of special purpose vehicles which invest in rebuilding the assets, recover their investment and then hand them back to the government.
The plan is expected to enthrone the concept of tolling as a major plank for pay back as it is the practice around the world.
An initial plan drawn up by the National Economic council had listed some key road projects as eligible for the piloting of this bold infrastructure initiative including the two business roads in the country – Abuja-Okeke-Auchi-Benin road; Shagamu-Ore-Benin road. Others touted for the pilot scheme could be the eastern and western narrow gauge rail lines that run from Lagos to Kano and Nguru and Port Harcourt to Kafanchan and Maiduguri.
Rehabilitating these two rail lines will open up the country as they traverse a total of 22 states and 450 cities and villages in Nigeria and are expected to focus on freight carriage as well as the movement of passengers.
This renewed attempt at rebuilding Nigeria’s infrastructure began to take shape on Wednesday, February 18, 2020, when a committee of state governors led by Nasir el-Rufai of Kaduna state laid a report advancing the plan before the governors’ forum which immediately gave its backing. The next day, the plan went before the National Economic Council for ratification.
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