The Federal Government has said it will invest $2.9tn in its infrastructure stock as part of plans to address the infrastructure deficit in the country.
The Minister of State for Finance, Dr. Yerima Ngama, said this in Lagos on Monday at an infrastructure roundtable organised by the Securities and Exchange Commission.
According to him, the investment will be made under the National Integrated Infrastructure Master Plan of the Federal Government, with the amount representing government’s targeted expenditure on infrastructure for the next 30 years.
Ngama, who said infrastructure was a key driver of economic growth and development, explained that the master plan was expected to help governmentprioritise projects and promote private sector participation in infrastructure development, thereby strengthening the economy.
He said, “The current state of infrastructure in Nigeria is inadequate; that is why government must aggressively increase core infrastructure stock from 35.4 per cent of Gross Domestic Productin 2012 to 70 per cent by 2043.
“We need to grow the rate beyond seven per cent of today to 12.4 per cent; this is to show that we have a lot to do to achieve the vision and if we can get the transformation agenda right, we will achieve Vision 2020.”
Ngama explained that the funds for the investment would be raised through various options including bonds, low interest loans, private public partnerships and budgetary provision.
He added that the capital market was expected to play a major role in funding infrastructural development, which was why the government was keen to support it.
The Director-General, SEC, Ms. Arunma Oteh, in her welcome address, stressed that infrastructure was vital to every economy.
She said, “Infrastructure is the lifeblood of any economy as no economy can grow and develop without a reasonable stock of critical infrastructure in transportation (roads, rail, ports and airports), energy, water, sanitation and communication. Where infrastructure is inadequate or ineffective, growth is affected and people’s standard of living is negatively impacted.”
Oteh, who said that infrastructure inadequacy was one of the key reasons why the cost of doing business in Africa was 30 per cent higher than other continents, explained that the challenges posed by traditional funding sources had made the capital markets increasingly the preferred way to finance infrastructure in Nigeria.
According to her, the increased appetite for bonds in the Nigerian market can be attributed to the measures such as enhancing the framework for bond issuance that the SEC has put in place.
She said, “We also pushed for revision of the tax regime to eliminate tax discrimination among different types of investors.
“In addition to the efforts made around conventional bonds, we have taken steps aimed at unlocking the potential of non-conventional financial products such as the Sukuk, Islamic finance equivalent for bonds, which is very useful for infrastructure finance, capable of attracting large long term investments from the gulf countries and other advanced Islamic finance markets.”