Article summary
- Delay in disbursing N1tn seed capital for InfraCorp, Nigeria’s public-private infrastructure company.
- Nigeria’s infrastructure deficit restricts growth potential, private sector participation crucial.
- Critical monitoring of InfraCorp’s projects necessary for success.
The Infrastructure Corporation of Nigeria (InfraCorp) is yet to fully take off due to a delay by the Central Bank of Nigeria (CBN) in disbursing the initial seed capital of N1 trillion to the four fund managers of the company’s assets.
Each of the four appointed fund managers has to receive N250 billion each. In 2021, the Federal Government approved the establishment of a Public Private Partnership Styled Infrastructure company.
The proposed establishment is expected to attract private sector participation in the nation’s quest to bridge its infrastructure deficit necessary for growth across all sectors of the economy.
What you should know
The firm was to commence operations in the third quarter of 2021 but to date, that has not happened. Sanlam InfraWorks; Africa Infrastructure Investment Managers; Triple A (a consortium of Afrinvest Asset Management Africa Plus Fund Partners and ARC Asset Management); and Chapel Hill Denham were the four fund managers appointed to manage the company.
Over the years, Nigeria has sustained a meagre allocation to funding infrastructure in its annual budget despite its pronounced infrastructural gap that has become a clog in the wheel of economic growth and development.
Nigeria’s growing infrastructure deficit remains a major concern among economic experts and stakeholders as poor infrastructure is one of the biggest impediments to smooth business operations and capital inflows into the country.
The paucity of investment in physical and social infrastructure over the years has continued to limit the growth potential of Africa’s largest economy, restricting its ability to exploit its vast amount of natural and human resources towards achieving a broad-based, sustainable, and inclusive growth.
In 2021, the World Bank estimated Nigeria would need c US$3.00trn to plug its infrastructural deficit.
We reiterate our view that the idea of InfraCorp is laudable as it conforms with what we consider the best model of infrastructure financing in Nigeria, which minimizes bureaucracy and maximizes efficiency.
The way to go
Collaborating with the private sector to bridge the widening infrastructure deficit appears the only viable option, given Nigeria’s current weak fiscal position and elevated borrowings.
However, given that the implementation of this idea will likely fall on the incoming administration, we believe a lot of effort must be put in place to ensure the idea is not swept under the carpet. funds and monitoring of approved projects to completion are critical for success.
The CBN governor, Godwin Emefiele, had noted in previous reports that many local and international private fund managers have shown interest in being part of the project.
The idea of InfraCorp is a laudable. We can only it’s implemented to the letter without political interference.