By Peter Egwuatu
STAKEHOLDERS accross the sub sectors have statedÂ thatÂ Â banks have a role to play in the realization of the objectives of the Vision 20:2020 , through its partnership with government on the revamping of Nigeriaâ€™s old and decaying infrastructure and the provision of new economic and social infrastructure. This belief is anchored on the fact that the nationâ€™s stock of decayed infrastructure has led to rising cost of doing business, declining profitability and the near collapse of the manufacturing sector in the country.
In the area of infrastructure financing, a few banks have been outstanding by partnering with the various state governments and government agencies to fund, build and install infrastructure of economic and social value for the development of the economy. In this group are banks like Skye Bank Plc, Oceanic Bank Plc and First Bank Plc.
Skye Bank is in part responsible for the changing face of Port Harcourt, the Rivers State capital, having been instrumental in financing the rehabilitation of some township roads, building shelter at bus-stops and financing taxis and buses for urban transportation. In all there are no fewer than over 150 buses and about 100 taxi cabs financed by the bank, with plans to fund another 100 buses and taxi cabs.
Similarly, the bank partnered with the Lagos State government to transform Lagos by providing part finance for the BRT transport system as well as building the routes that the BRT buses pass. Today, the state and the people are the better for it as they enjoy fast and efficient transportation.Â In Kaduna State, the bank is financing the state Independent Power Project which is expected to improve electricity supplyÂ Â and revive the already shut down industries that could not cope with sourcing alternative power supply.
Speaking on the issue of infrastructure financing , Group Managing Director of Skye BankÂ Plc , Mr. Akinsola Akinfemiwa, said ,Â â€œ Banks are not charity organsations but commercial organisations driven by the profit motive. They therefore want the requisite conditions for their investments to flourish and yield returns before committing their resources into funding infrastructure.â€
At the recent Transport Summit organized by the Rivers State Ministry of Transportation, The Skye Bank boss listed theÂ critical factors to be addressed for effective PPR to include : provision of incentives for the private partners by the government, selection of the rightÂ and committed partners, simplification of project execution devoid of bottle necks, and showing exemplary political leadership by the government.
In a paper entitledÂ Conceptualisation ofÂ the PPP StrategyÂ During the Transport Sector Reformâ€Â Akinfemiwa who was represented by the bankâ€™s Executive Director, Risk Management/South South, Mrs Ibiye Ekong, also identified the existence of dedicated income streams and good cash flow for the projects, communication with the stakeholders, public sector involvement and shared responsibilities between the private and public partners.
Furthermore, the establishment of the Infrastructure Concession Regulatory Commission (ICRC) by the Federal Government is seen is a bold effort to give development a facelift by turning around the decadent state of our infrastructure. While the ICRC is to moderate the activities of players working towards the development of new infrastructure, the banks are expected to provide the critical funding to execute the projects.
Speaking recently in Lagos, theÂ Chairman of ICRC, Chief Ernest Shonekan, called on Nigerian banking and financial sector to strive to be more innovative by developing long term capacities to promote and support investment in infrastructure financing. Shonekan, who spoke in Lagos at a presentation delivered at the JK Gadzama and Partners, stated that it was only through such products and initiatives that the nation can create the needed credit instrument required to finance the huge infrastructural gaps in the country.
The ICRC boss observed that banks as private sector operators have a significant role to play towards the attainment of the Vision 20â€“2020 targets set out by the Umar Yarâ€™Adua, administration, as was the case in other transiting economies which risks are shared for the benefits ofÂ all participants in the economy.
According to Shonekan, the government must put in place the institutional and regulatory framework that provides open and transparent processes and procedure as well as a level playing field that promotes competition and ensure investors in any sector are able to take their returns for the risks taken.
Because of the importance of infrastructure in the performance of the economy and its impact on lives and businesses in Nigeria, a tripartite meeting of the Federal Government, Central Bank of Nigeria (CBN) and bank chiefs was held in Lagos last July. The breakfast meeting between Sanusi Lamido Sanusi, CBN governor, and bank chiefs was attended by Shamsuddeen Usman, the National Planning Minister, where he solicited the co-operation of banks towards financing the rehabilitation of the decaying infrastructure in the country.
Usman told the bankers if the vision of the country to attain the status of one of the top 20 economies by the year 2020 is to be realised, the present level of infrastructure must be improved upon.
According to him, the establishment of the Infrastructure Concession Regulatory Commission (ICRC) underscores governmentâ€™s preparedness to tackle the issue of decaying infrastructure.
Usman said government is interested in involving banks in the development process of the Nigerian economy, hence the meeting to convince them to be partners in progress.
â€œThe banks are expected to finance projects that will help in actualising the dream. Our hand is already on the gun, and before too long the trigger will be pulled and there will be an explosion, taking us to our goalsâ€, he said. Already, the ICRC has raised a steering committee to kick start the development which is anchored in the Public Private Partnership (PPP) initiative.
Active Banks in infrastructure funding
I Speaking at the recent Rivers State Ministry of Transportation summit in Port Harcourt, the stateâ€™s governor, Hon. Rotimi Amaechi, commended Skye Bank for coming up with ideas and funds for the numerous projects going on in the state. The governor said the bank was responsible for about 70 per cent of the ideas and funds for on-going projects in the transport sector in the state.
Oceanic Bank has also been credited with the funding of the new wing of Murtala Mohammed International airport by granting facilities to Bi-Courtney Limited, the company that built the new arrival and departure halls and the parking lots. The company also expanded the runway at the airport. The bank is said to have committed several billions of naira into the project.
In addition, the bank has partnered with several states like Delta, Kano to fund some critical projects that positively affect the lives of the people. In Kano, the bank went into partnership with the state government on the development of a new town to decongest the metropolis. About N5 billion is estimated to go into the project which in turn will ease the housing crisis facing the state.
While the banks are now embracing infrastructure financing through private public partnerships, it is important for the Federal Government and the various state governments to create the enabling environment for the expansion of areas covered and ensure that banks get their money back by removing laws that make recovery difficult or impossible