Nigeria’s infrastructure problems take center stage at UK-Africa summit
Marketing Nigeria to investors at the UK-Africa Investment Summit in London should have been an easy task owing to the country’s glaring opportunities, but to some investors, its infrastructural challenges are too big a risk to overlook.
According to three investors who spoke with BusinessDay at the summit on Monday, the investment opportunities in Nigeria will be more attractive if the country bridges its infrastructural gap.
“Yes, I see a lot of investment opportunities in Nigeria; the biggest economy, large population size and the most heard about around the world,” an investor who simply identified himself as Gorge told BusinessDay in London. “But I also hear about the state of your infrastructure and that scares me a lot.”
According to the National Infrastructure Master Plan, Nigeria needs to spend $3 trillion and five percent of its GDP annually to bridge the infrastructure gap.
“I would love to invest in Nigeria but I’m too sure about the risks in the country,” an investor who didn’t want to quoted said.
From roads to bridges, down to power and railways, the country suffers a yawning infrastructure deficit, owing to poor maintenance culture, insufficient funds, and corruption.
“What investors are talking about here at the UK-Africa summit is about infrastructure challenges; energy, roads and less bureaucracy,” Ngozi Okonjo-Iweala, former minister of finance, told BusinessDay.
Speaking to BusinessDay on the side lines of the summit, Iweala stressed also on the need for Nigeria to improve its enabling environment to attract more investments.
“Enabling environment is also a key constraint and I hope we’ll be able to work on these challenges,” Iweala said.
To close the infrastructure gap, governments together with their partners in development finance institutions (DFIs), will need to unlock private-sector infrastructure financing at a scale, an American-based consulting firm, McKinsey recommended.
“There is no doubt that to achieve the SDG goals, the most important thing is infrastructure; power, water, roads, rail, airport and all things that you need to be competitive and effective in the global market,” Akinwumi Adesina, President of the African Development Bank, said.
Commenting at a panel session at the summit, Adesina said infrastructure gap becomes a big challenge when the size is between $68 billion to $108 billion per year.
Oil price hits US$65.00 as Libyan oilfields shut down
Oil prices rose to their highest in more than week on Monday after two large crude production bases in Libya began shutting down amid a military blockade, risking reducing crude flows from the OPEC member to a trickle.
According to Bloomberg data, Brent crude was up 41 cents, or 0.6%, at US$65.26, having earlier touched US$66.00 a barrel, the highest since January 9.
MTN, GTB, Zenith push equities to positive start
The Nigerian equities market opened the trading week positive, with the All Share Index (ASI) rising by 31bps to 29,710.56pts while Market Capitalisation closed at N15.30 trillion.
Year-to-date, the ASI has gained 10.69%. Monday’s rally was supported by gains in some market bellwethers – MTN Nigeria, Guaranty Trust Bank and Zenith Bank.
Activity level opened the week mixed, as volume traded declined by 17.86% to 267mn units while value traded rose by 17.70% to N4.18bn.
Law Union Insurance (+10.00%), Total Nigeria (+9.35%) and Cadbury Plc (+8.50%) were the best performing stocks. On the flipside, NCR (-9.88%), Nestle Plc (-6.12%) and Unity Bank (-5.80%) emerged the worst performing stocks, closing lower to N3.65, N1,380.00 and 66Kobo respectively.
CDC to invest US$39.2mn in SMEs
CDC Group, the United Kingdom’s publicly owned impact investor, has announced the commitment of US$39.2mn to support the Small and Medium Enterprises in West Africa. The company said in a statement on Monday that it was backing Verod Fund III and Adiwale Fund I with commitments of US$19.2mn and US$20mn respectively as they were West African-based private equity funds targeting the SMEs in the region.
IMF’s growth forecast means Nigerians will remain poorer in 2020
International Monetary Fund (IMF) on Monday retained 2.5 percent growth for the Nigerian economy in 2020-21, as earlier estimated in October 2019.
The Washington-based Fund released its World Economic Outlook (WEO) titled ‘Tentative Stabilisation, Sluggish Recovery,’ in Davos on Monday.
IMF had in October 2019, projected that Nigeria’s real economy would grow by 2.3 percent in 2019 and 2.5 percent in 2020 compared with 1.9 percent projected in 2018.
Damilola Adewale, a Lagos-based economist and independent consultant, says although the IMF is more optimistic than World Bank that predicted 2.1 percent for FY2020, this points that growth for 2020 will be subdued at about 2 percent. And this kind of growth is weak to lift millions of people out of poverty and generate jobs for the unemployed.
“It also indicates that many Nigerians will be poorer given that per capita income will continue to decline. Not until policy makers take the bold steps to implement friendly policies in line with free market principles, foreign investment will continue to elude the economy and this 2 percent growth syndrome will last at least for five to six years,” Adewale states.
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