An initiative to launch a major programme for the renewal of Nigeria’s decrepit infrastructure has remained frozen 10 full months after governors of the 36 states, the vice-president, governor of the Central Bank of Nigeria and the country’s Sovereign Wealth Fund, NSIA, gave the plan their unqualified backing.
On Wednesday, February 18, 2020, a committee of the 36 governors led by Kaduna State Governor Nasir el-Rufai first put the plan before the Nigeria Governors’ Forum, which gave its backing.
The next day, this plan for Nigeria’s infrastructure rebirth received the unanimous approval of the National Economic Council (NEC) at a meeting where Vice President Yemi Osinbajo, the 36 state governors as well as the minister of finance, the CBN governor and the CEO of Nigeria’s Sovereign Investment Authority (NSIA) were all present.
Again, all members in attendance, particularly the latter three, voiced their total support for the plan to establish the Nigeria Infrastructure Investment Fund (NIIF).
According to documents reviewed by BusinessDay, the plan involves the identification of key national infrastructure projects (assets) across Nigeria, which are to be vested in the NIIF.
The NIIF is to be established by and under the auspices of the NSIA, which will be the manager of the Fund.
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The NSIA will then leverage its two most important qualities – first, its sovereign status which enables it to move and conclude transactions much faster than would ordinarily be the case and, second, its acclaimed credibility in domestic and international money and capital markets.
It was expected that these would enable the NSIA to create credible investment vehicles around each infrastructure asset, which local and foreign investors, including pension funds, equity and infrastructure fund managers, would find attractive. This was, and still is, the plan approved by the National Economic Council and placed before the president, one governor told BusinessDay.
“The background to this is the recognition that the availability of bankable major infrastructure opportunities in Nigeria is hindered by the fact that the assets that underpin these opportunities are all in the hands of the government,” said a leading lawyer who has followed the process.
“With much less than three years to go, putting assets into appropriate corporate vehicles and rapidly undertaking transactions around is now of utmost importance. In the dire circumstances in which the country now finds itself, there is a need to release these assets to the private sector via a process that is credible but fast-tracked and is capable of attracting the best available management and financing,” the lawyer said.
However, after the February 19 meeting, the governors sent a memo to President Muhammadu Buhari in which he was requested to approve the NEC proposal for the establishment of the NIIF.
In responding to the president’s request for comments on the NIIF plan, the CBN, which had originally expressed unreserved support for the NIIF, sought to introduce a parallel infrastructure rollout plan for an entity to be called InfraCo.
This obviously introduced significant friction amongst key economic sector players in the Federal Government, especially considering the push for InfraCo.
Since then, attempts at finding common ground have largely failed and Nigeria may now have to wait endlessly for the envisaged infrastructure rebuilding programme that cannot get off the ground.
BusinessDay spoke with a number of senior government officials in Abuja and none could confirm if, as has been touted, the concept of InfraCo has actually been approved by the president.
Our reporters learnt, however, that the vice president has been mandated by President Buhari to review the CBN’s InfraCo proposal.
At the end of the 22nd meeting of the Nigerian Governors’ Forum (NGF) held on Wednesday, December 2, Ekiti State Governor Kayode Fayemi issued a four-page communiqué which re-affirmed the governors’ commitment to NIIF led by and under the management of the NSIA, although the communiqué also “noted that the CBN governor had a similar proposal”.
The NGF communiqué noted that the two plans are not mutually exclusive. BusinessDay investigations reveal that while the CBN-led InfraCo touts the capacity to aggregate as much as N15trn, the NGF is also clear that the fastest and most commercially viable route to developing credible private sector-funded and -managed projects without necessarily selling these state assets is via the NSIA/NIIF process.
The committee created by NEC had identified four anchor projects in the initial phase to demonstrate the viability of the scheme.
These are the Abuja-Lokoja-Okene-Auchi-Benin road; the Sagamu-Ore-Benin road (two of the busiest roads in Nigeria), as well as the Western and Eastern narrow gauge lines that run from Lagos to Kano and Nguru and Port-Harcourt to Kafanchan and Maiduguri, respectively. These two rail lines traverse a total of 22 states and 450 cities and villages in Nigeria and are expected to focus on freight carriage and the movement of passengers.
According to documents seen by BusinessDay, the formal establishment of the NIIF will be, first, via a Presidential Order to allow the Fund to hold a portfolio of assets around each of which a project SPV would be created.
These SPVs, under the auspices of the NSIA, would enter into project management JVs and attract pension funds via capital market instruments issued by the SPVs to finance their projects.
It is unclear if the president is aware of how a matter that first came to his attention 10 months ago has gone nowhere beyond the confines of the State House Abuja and whether he will now ask questions and direct speedy implementation of a plan that has so much economic expansion and job creation imperatives.
