The House of Representatives is working out the proposed legislative framework for the establishment of Infrastructure Development Bank.
BusinessDay however gathers that the bill sponsored by Isiaka Ibrahim is already causing ripples among stakeholders in the financial sector, as it threatens the multi-billion dollar investments attracted into the country through the past and incumbent administration.
The controversial bill, which scaled first reading some months ago, has already been gazetted for second reading on the floor of the House of Representatives.
The six-page bill seeks to “repeal the Urban Development Bank of Nigeria Act CAP. U16 LFN, 2004, and to enact the Infrastructure Bank of Nigeria Act, 2016, for the purpose of encouraging infrastructural development through the provision of financial assistance to qualified infrastructural projects selected by the bank and for related matters.”
Following the privatisation of UDBN in 2007, and the setting up of Infrastructure Bank plc, the private investor has majority shares, while the Federal Government, state governments and local governments as well as the Nigeria Labour Congress (NLC) own minority shares.
BusinessDay finding however shows that the ongoing legislative process remains unknown to the management of Infrastructure Bank plc with its headquarters in Abuja, and conflicts with the set objectives and current operations of the bank, and how relevant infrastructure banks and/or development finance institutions operate in other climes like Brazil, South Africa, India, Indonesia, among others.
A source familiar with the workings of the bank argued that certain provisions in the proposed legislative framework, if passed in the present status, will jeopardise investors and other shareholders interests and stifle the huge potentials of the bank in performing its dual functions as a financial institution and development agency, regulated by the Central Bank of Nigeria (CBN).
A banker who spoke on the lacuna in the proposed bill specifically called for the deleting of various sections which involve President, Minister and ministries of Housing, Urban Development, Works and Transport as stipulated in the day to day running of the Institution.
“As a development agency, Infrastructure Bank Plc is statutorily expected to support public and private sector agencies to identify, prepare and implement infrastructural projects and assist them to access funds to finance these projects. Never forget that the Bank was registered in accordance with the provisions of the Companies and Allied Matters Decree, as a limited liability company, and can only be regulated under CAMA, unlike other parastatals established and regulated by statute like Nigerian Export-Import Bank (NEXIM), Bank of Industry (BoI) or National Economic Reconstruction Fund (NERFUND).
“Likewise, as a financial institution, it has the latitude to mobilize funds for investment and on-lending for infrastructure projects,” a financial expert told our Correspondent, stressing that undue interference by any arms of government in the day to day operations of the Bank may frustrate the intentions of the institution as a private sector concern.
Some of the contentious sections include: section 2(2) which vested powers on the President to appoint 2 out of the 7 members of the Board while 5 will represent the private sector interest as well as section 3(1) which pegged the terms of office of the Managing Director and Executive Director of the Bank at “four years and no more”, in contravention to the provisions of CAMA and CBN, which stipulates 10 years tenure as well as sections 3(1e), 4(1, 2), 15(1), which stipulated bank’s officials removal from office.
Likewise, 4(1), 5(1), 6(5), 10(7), 12(1), 14(3), 15(1), among others which subjects the Bank to the “general direction” of the Minister in the day to day running of the privatised entity (bank), appointment, approval of borrowing as well as prepare and submit a report of the Bank’s activities to the President and audited accounts as applicable to the public owned institutions.
Section 2(3) provides that the Board of the Bank shall comprise of members with a diverse set of expertise in infrastructure project development and financing namely: transit, public housing, road and bridge, water, aviation, freight or passenger rail and public finance infrastructure, respectively.
Recall that the top management of the bank, who accompanied President Muhammadu Buhari to China, signed three major infrastructure development projects worth $3.7 billion out of the total investment of $6 billion attracted into the country.
The Bank at the home-front had over the years successfully developed appropriate business development models and transaction advisory blueprints for the rapid turnaround and revitalisation of the Nigerian Railway system using project finance (alternative financing mechanisms) techniques; framework for road concession in Nigeria; advisory services to Federal Ministry of Finance in the FGN-Chinese EXIM Bank for the $2.5 billion bilateral loan for infrastructural projects; as well as offered transaction advisory services to Federal Roads Maintenance Agency (FERMA).
The bank was also appointed as Transaction Advisor on various landmark infrastructure projects in Lagos, Adamawa, Ekiti and River States, FCT; office of the Chief Economic Adviser to the President and Federal Ministries of Transportation, Water Resources, and Works; as well as Fund Manager for the N25 billion Public Mass Transit Revolving Fund Scheme, and several others.
KEHINDE AKINTOLA
