By Babajide Komolafe

Among other things, Nigeria’s economic development is confronted with the challenge of huge infrastructure deficit.  According to the Africa Infrastructure Country Diagnostic (AICD) Report for 2011, the country requires sustained spending of $14.2 billion per annum over the next decade in order to address the infrastructure challenge. Furthermore, it is estimated that Nigeria needs N10.63 trillion ($67 billion) for road upgrades, bridge repairs, the energy sector, hospitals and schools.

The above scenario, as experts have surmised, clearly shows that as a result of the huge funding requirement for present and future infrastructural development and its attendant impact on survival and growth of businesses in Nigeria, traditional funding methods can no longer suffice as the traditional fund providers, different levels of government, do not have such resources at their disposal.

Consequently, Private Finance Initiatives (PFI) and Public Private Partnerships (PPP) are being adopted to meet the funding challenge. In Nigeria, PFI and PPP are relatively new models for public project finance and commercial banks remain the formal source of finance for driving PFI among enterprises.

Of course, banks have three social and economic functions: to collect and secure savings and other deposits; to finance the economy by handing out credits; and to facilitate payments and to transfer funds. Their role is to reduce the gap between supply (the money deposited and potentially available) and demand (the money needed for investment) that exists between idle money and productive investment.

In recent time, an increasing number of socio-economic projects bothering on infrastructural and natural resources rejuvenation and business growth and expansion initiatives have been developed and financed through equity and medium to long term loan packages by commercial banks. In the last half decade, leading banks like First Bank, GTBank and Zenith have continued to make strong mark the area of project financing.

However, a quick look at the country’s project financing market shows commendable influence being exerted by a few new players, who ordinarily, would have been considered as greenhorns without the required skill, stamina and wizardry to play in the intricate game of project financing. Leading in this wise is Heritage Bank, which entered the market about Twenty Four months ago.

Since its foray into the Nigerian, financial sector, Heritage Bank has played a pivotal and leading role in the equity and project financing market, arranging in excess of $2 billion of debt facilities either as lead or sole financier or financial adviser. The field of engagement has equally been diversified; covering economic sectors such as MSME, Entertainment & Arts, Education, Oil & Gas, Aviation & Haulage and Public Sector.

For instance, the bank has midwived over $100 Million in funding for a variety of transactions in the film and entertainment industry from 2013 to date. These include Bloomberg TV Africa (the Pan African TV by Bloomberg LLP), Free-to-Air TV Broadcast Rights in Nigeria for the 2014 FIFA World Cup, HIP TV (a Pan African TV Music Channel broadcast on satellite TV which was funded from scratch) and a variety of other investments spanning content, platforms and production.

Also, the innovative multi-billion naira MSME Investment Protection Fund (InPF), which is a non-collateralized funding option with embedded insurance to address the default risk inherent in the SME Finance scheme, remains a strong differentiating indicator of the Heritage Bank approach to SME funding in the country.

However, the recent successful finance of Forte Oil Plc’s acquisition of 100 brand new Mercedes Benz product delivery trucks for haulage, logistics and product transportation across the Country as well as the Project Finance Facility to PIPP LVI GENCO to set up a 6.5MegaWatts Captive Power Generating Plant and a 25km Distribution Network to power Public Utilities in Lekki, V/I and Ikoyi represent giant strides by the relatively young Heritage Bank which had already financed similar and bigger projects in Port Harcourt and Abuja in deals worth several billions of naira in the last twelve months.

Speaking on the significance of Heritage Bank’s project finance initiatives, Executive Director, Manila Banking, Niyi Adeseun noted that, “For us at Heritage Bank, our core business philosophy as a timeless wealth partner to our customers is captured in our mission to create, transfer and preserve wealth.

Our support efforts through project financing in the various sectors of the economy is one of the platforms that underscore our resolve and readiness to make a mark in the financial sector as a major pivot of socio-economic transformation of our country” Continuing, he explained, “For instance, in the Oil and Gas industry, our interventions span the downstream sector areas of product importation, supply, engineering and many more while we are also gradually getting really involved in the upstream as well. We have financed a few of such projects in Port Harcourt and we have a couple of them also in Abuja”.

In a testimonial, Group Chief Executive Officer, Forte Oil Plc, Akin Akinfemiwa lauded Heritage Bank on its project financing portfolio. According to him, “We appreciate the strategic role of Heritage Bank in financing the acquisition of our latest 100 world-class product delivery trucks which, to us, is a very strategic investment that will substantially increase our capacity to grow our revenue and profitability and ultimately maximize value for our stakeholders”.

It is indeed very clear that due to Nigeria’s rich entrepreneurial culture, its dynamic economic landscape is characterized by a high level of local and international trade which has continued to witness growth over the years. This has been generating and will, possibly, continue to generate high demand for innovative commercial and corporate finance services.

New financial services providers like Heritage Bank who can project an innovative business philosophy of building strategic business relationships across diverse segments through the provision of appropriate support to manage their cash flow and maximize their investments by equity extensions and facilitating import/export trade transaction in a less strenuous way are already established on strong foundation to drive their survival and growth in the nation’s highly competitive banking sector.