Stakeholders Rue Infrastructure Deficit, Demand Private Sector Intervention

BY CHINYERE OBIORA, LAGOS – Stakeholders in Nigeria’s finance industry insist private sector support is germane in boosting Federal Government’s drive to address the huge infrastructure deficit in the country.

According to them, there is no denying the fact that government alone can not address the problem of Nigeria’s infrastructure deficit given the challenging task of national development and sustainable socio-economic growth

This position was taken by Panelists at the 30th anniversary of the Finance Correspondents Association of Nigeria (FICAN) with the theme: ‘Financing Infrastructure & SMEs for inclusive growth in the post-COVID-19 Economy’

In his intervention, the Chief Executive Officer of FMDQ Group, Bola Onadele “Koko”, said the COVID-19 pandemic has weakened government revenue to sustain infrastructures’ funding across the country.

The FMDQ boss, who was represented by the firm’s Head Private Market, Yomi Osinubi, creative ways abound to woo and bring the private sector to actively participate in the nation’s infrastructure development.

Also speaking at the occasion, Director-General of Debt Management Office (DMO), Ms Patience Oniha asserted that the government alone cannot address the country’s infrastructural needs, given the paucity of funds at its disposal.

For her; “There must be creative ways of opening up the system to enable us to bring the private sector, where we can pool the capital to fund infrastructure. That has started with what we are doing with the road clean-up infrastructure with Dangote trying to take care of some roads.

“Some other private sector players will enjoy that tax incentive to encourage them to participate, bearing in mind that the government alone cannot do it. We are expecting you people to put together a proper communique that will advise the government on how to bring in the private sector properly to address our infrastructural gap.”

However, Oniha explained that there is still room for more borrowing to finance infrastructure, stressing that investors have a huge interest in the country’s infrastructure development.

Represented by DMO’s Director, Operational/Research Department, Joe Ugoala, the DMO Chief Executive said; “In the last edition that we just did where the country raised $4 billion, the idea was that we could raise a minimum of $3 billion and we found out that people still have an interest in our country. Even though we seemed to have doubts, the international investors still have faith.

“They still believe in the fundamentals of this economy. We were asking for $3 billion, we ended up having $12.2 billion, which was almost 400 per cent of what we actually asked for. We had to say this because of our approval from the National Assembly which is within the requirement of the Appropriation Act.

“So, what the country took from that outing was $4 billion out of the $12.2 billion. You can see that there is so much interest in Nigeria’s instrument across Asia, America, Europe, and other parts of the world.

“Basically, we issued three instruments – three tranches of the 7-year instrument, 12-year instrument, and 30-year instrument. What this means is that if private domestic investors go offshore to borrow, their instruments can be priced as of the sovereign,” she concluded.

Similarly, former Acting Managing Director, Bank of Industry (BOI), Dr. Waheed Olagunju, urged the government and the private sector to boost the capacity of the Small and Medium Enterprises (SMEs) sector.

According to him, “We need to build the capacity of our people; government and the organised private sector have a role to play. I believe that the government and private sector development partnership will help.

“We need to work on the ecosystem looking at what other countries have done: they invested in industrial park and technology as a short-term measure. A railway line, for instance, can be located at the industrial park so that it will be close to where the infrastructures are available.”

He said given that the world is awash with investable funds in excess of $17 trillion, Nigeria is one of the best investment environments in the world, adding that; “Investors are looking for where to invest and return-on-investment in Nigeria, prior to COVID-19, was one of the highest in the world.

“According to UN statistics, Nigeria was ranked between 21 and 35 percent on Return-on-Investment, Nigeria has the highest foreign direct investment in Africa. The world wants to do business with Nigeria”

On her part, the Managing Director and Chief Executive Officer, Fidelity Bank Plc, Mrs Nneka Onyeali-Ikpe, said banks are not shying away from their responsibilities of supporting SMEs.

Onyeali-Ikpe, who was represented by Divisional Head, SME Banking, Osaigbovo Omorogbe, said; “Commercial banks are not running away from supporting SMEs but joining hands with the government and other stakeholders to refinance all of what you see around infrastructure which is critical to the economy.

In her words; “I think the questions that should be answered for every proposal are, ‘Is it bankable? If you are going into this, what structure should be in place to ensure that the funds we are going to put in will be recovered back because we have stakeholders and investors who are also looking towards a good result’?”