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Infrastructure deficit: Experts advocate private financing

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By Yinka Kolawole

Investment and finance experts have called on the federal government to vigorously explore private capital as viable alternative to financing Nigeria’s huge infrastructure needs in the face of dwindling government revenue.

The experts spoke over the weekend in Lagos at the 2017 annual conference organized by the Finance Correspondents Association of Nigeria (FICAN), with the theme, “Financing Nigeria’s Infrastructure: Issues, Challenges & Options”.

Acting Director General, Infrastructure Concession Regulatory Commission (ICRC), Engr. Chidi Kingsley Izuwah, in his presentation, said large transport infrastructure projects require investment capital beyond the capacity of the federal and state governments in any single year, given their competing priorities, adding that external funding sources are inevitable for the long-term. He stated: “Private Public Partnerships (PPPs) cannot by themselves bridge the gap. Government spending needs to be more smartly deployed, to achieve the best value for money in any given project, for example, through annuity payment contracts. Private capital sanitizes corruption because nobody borrows to go and pay a bribe.”

According to Izuwah, private capital is a force for good, but a number of factors prevent Foreign Direct Investment (FDI) and cause diversion of capital to other countries where the investment climate is more favourable.     Enumerating the things that attract private investment, Chief Executive Officer, Rand Merchant Bank Nigeria, Michael Larbie said: “Clearer legal   and  regulatory framework; improved and efficient competitive bidding procedures; consistent sector policies, (e.g. tariffs regimes, rule of engagement); Strengthened management of fiscal obligations and supportive regulatory environment are key.

“Government must build a track record of public private partnership (PPP) performance to attract large sums of long-term funding from pensions funds and insurance.”

Chief Executive Officer, Viathan Engineering Limited, Mr. Ladi Sanni, noted the fact that Nigeria needs about $100million annually for proper infrastructure financing, which the government alone cannot provide.

“Part of the problem we have in Nigeria is contract sanctity. The Judiciary has a role in interpreting the legal framework for POP. Government needs to demonstrate that private investors can go onto long term investment with them. Government bonds limits investment into high risk power project. We would like government to look at the issues of infrastructural bond,” Sanni stated.

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