Tariye Gbadegesin: Investment professional bridging Nigeria’s infrastructure gap

Tariye Gbadegesin, an investment professional with 20 years of experience in the financial services sector and over $ 3 billion of transaction experience is embarking on a quest to change the narrative of Nigeria’s infrastructure gap.

Blackouts are an everyday event in Nigeria. A weak electricity grid and insufficient generating transmission, distribution capacity cause widespread and regular power outages, forcing millions of people to rely on costly and polluting diesel generators to keep the lights, refrigerators, and computers on.

In order to change this narrative, Tariye Gbadegesin, the Managing Director and Chief Investment Officer of ARM Harith Infrastructure Fund Managers (Armhith) is playing a big role in making sure infrastructure finance plays a critical role in promoting economic growth, improving standards of living, reducing poverty, enhancing productivity and improving competitiveness.

Armhith is a joint venture firm between Asset & Resource Management Company Ltd (ARM), a Nigerian institutional investor with $2.3 billion of assets under management and Harith General Partners (Pty) Ltd (Harith), a South African infrastructure fund manager with over $1 billion of assets under management.

Armhith is also the first equity infrastructure fund to be licensed by the Nigerian Securities and Exchange Commission under its recent Infrastructure Fund rules.

Also, Tariye Gbadegesin was on the founding team to establish the Africa Finance Corporation ( AFC), a pan-african development finance institution (DFI) with $6 billion under management. At AFC she led several of its investments in the power, transport, industrials and telecommunications infrastructure.

Tariye Gbadegesin was the head of Industrial and Telecommunications Infrastructure leading the firm’s deployment of debt and equity capital across Africa.

In that role Tariye delivered investments of over $800 million in four years. Tariye was a non-executive Director on the Board of the Main One Cable Company, a telecoms and data services company serving West Africa and Cabeolica Wind IPP in Cape Verde, the first commercial wind IPP in sub-saharan Africa.

Clearly, Tariye’s experience is highly needed as Nigeria is currently faced with a huge infrastructure gap that has hindered its desire to exploit its rich natural and human resources to stimulate economic development.

For instance, in spite of the country’s huge oil and gas, sunlight and hydro resources, Nigeria cannot generate enough electricity to drive its development.

In an opinion article titled ‘De-risking Infrastructure Investments in Africa’ Gbadegesin narrated that in several cases of African infrastructure projects, the underlying sectors have systemic risks that can only be allocated to the government.

One clear example is the growing apprehension in government circles over the sovereign guarantee given by the Buhari administration in 2015 to Azura- Edo IPP, a powergenerating private company, to enable it secure a $237 million loan to finance its 450MW project in Edo state.

“The landmark project finance arrangement was to be the blueprint to attract much needed capital to Nigeria’s energy-hungry market. However, success relied on the government resolving issues with other parts of the electricity system right such as tariff adjustment and gas availability in a timely manner, which has not been the case,” Gbadegesin said in an article published on africaglobalfunds.com.

To truly tackle the problem, Gbadegesin reckons DFIS and the Nigerian government must create solutions for Nigeria’s electricity system in its entirety.

“DFIS and the government can use their capital and guarantees, respectively, to drive delivery of gas, support gradual increases in tariffs, and provide backstops to investment in transmission and distribution. This would make the entire system more commercially viable and take advantage of smart credit enhancements like the Put Call Option Agreement (PCOA) to attract private capital,” Gbadegesin said.

According to her, some lessons for Nigeria’s electricity system can be found in the successful turnaround of the Societe Ivoirienne de Raffinage (SIR), a 50-year-old refinery in Cote d’ivoire were the refinery built up debt arrears over the last 10 years and these liabilities became a drag on the sovereign’s balance sheet because of the refinery’s government ownership.

The government of Cote d’ivoire wisely integrated a fuellinked levy that was securitised by lenders and is fully transparent to all parties. The loan was then backed by a sovereign guarantee.

However, the refinancing facility was tied entirely to the value of the levy amount to ensure that the risk of the sovereign guarantee crystallizing would be minimal.

“Participation by DFIS such as the Africa Finance Corporation (AFC) and the African Trade Insurance Agency strengthened the validity of the government’s commitment to maintain the levy and other policy commitments,” Gbadegesin said.

She noted that structuring by AFC requires full transparency and security of the levy collection that aligns with global best practices and gives international lenders comfort. Financial close occurred in 2018, and the loan performance has been successful.

Gbadegesin noted that DFIS have increasing amounts of capital at their disposal as the African Development Bank (AFDB) just doubled its capital from $93billion to $208billion, the largest in the history of the AFDB.

“One wise use of these monies would be to fix systemic risks, such as those inherent in Nigeria’s electricity value chain thereby reducing the probability that government guarantees actually crystalize. This would give governments much more comfort in providing support and therefore stimulate private capital into infrastructure,” Gbadegesin said.

She got global experience from working at the International Monetary Fund, Boston Consulting Group and Pricewaterhousecoopers. She has proficiency in French and Spanish and a working knowledge of Portuguese. She has lived in the US, Kenya, Cost Rica and Nigeria.

Tariye Gbadegesin has a bachelor’s degree in Economics from Amherst College, and an MBA from the Harvard Business School.