Emefiele. Photo/TWITTER/CENBANK
Say $3tr Deficits Worrisome
Experts, yesterday, chart leeway for the workability of the N15tr infrastructure fund, being currently championed by the Central Bank of Nigeria (CBN) alongside African Finance Corporation and the Nigerian Sovereign Investment Authority.
Across sectors, inadequate infrastructure, estimated to require about $3tr lay strong siege to economic development, making business operations difficult, while adding to the high cost of goods, unemployment and poverty.
Governor of CBN, Godwin Emefiele, disclosed that, “the N15tr fund, coming as InfraCorp Plc. and expected to be launched in October, would enable the use of mostly private capital to support infrastructure investment that will have a multiplier effect on growth across critical sectors.”
With inflation hovering around 17.33 per cent, as unemployment stands at over 33.3 per cent, while rising debt poses grave dangers for future generations, a Senior lecturer at Ahmadu Bello University, Zaria, Prof. Muhammed Usman, said investment in infrastructure in Nigeria is below par.
Noting that between 2009 and 2013, Nigeria invested a paltry $664 yearly in infrastructure, which represents three percent of its GDP, compared with an average investment of $3.060 or five per cent of GDP in developed countries, Usman said: “Infrastructural development plays a pivotal role in enhancing economic growth, improving living standards, reducing poverty, and contributing to environmental sustainability.”
Although stakeholders stressed the need for massive investment in infrastructure, noting that CBN’s efforts remain laudable, they insisted there was need for proper and sustainable plans that would lead to projected goals.
A professor of Economics at Babcock University and former President, Chartered Institute of Bankers of Nigeria (CIBN), Segun Ajibola, said though thousands of road network, rail lines, energy and power, water and others remained critical, they are sadly inadequate or dilapidated.
He explained that the deficits constrain the nation’s economy, despite growth in population, urbanisation and technological advancement. Thus, the need for provision of these essential infrastructures is inevitable, though daunting.
“Hitherto, some reliance had been placed on other sovereigns, such as China, international financial institutions, such as the World Bank and ADB, among others. But there is limit to what Nigeria can attract from these countries and institutions because of the not-too-friendly conditionality usually imposed on developing countries like Nigeria.
“Looking inwards, the manner being proposed by the CBN may be helpful. But then, the framework must be right. I would recommend Private Partnering via collaborative arrangement between local and foreign interests, adjudged competent in providing such infrastructures,” Ajibola said.
In his view, PPP would improve quality of delivery, performance and accountability, and that such interventions were expected to berth with relatively generous terms and business-like template.
He urged the apex bank to introduce framework for monitoring performance, which must be efficient and effective, and that there must be shift from seeing intervention funds as free public moneys.
Former President, Nigerian American Chamber of Commerce and chairman of Tricontinental Group, Olabintan Famutimi, said while the infrastructure deficits in the country is worrisome and requires such intervention as the CBN funding, the country must tread wisely.
He was concerned about channeling funds into viable projects with economic benefits, instead of politicising economic and business decisions.
“Yes, we need infrastructure, but it is more about which infrastructure government is working on, funding source and the conditions of the fund, as well as the overall effect on the economy,” he said.
He noted that raising fund to finance infrastructure is not enough, but critical examining of the economic outlook of the projects and the multiplier effects on the nation is sacrosanct.
An expert at PWC, Habeeb Jaiyeola noted that while Infrastructure funds are used globally for development of critical infrastructure, which guarantees constant returns on investment, a critical element of the funds’ success is adequate planning and strategic contracting.
“It is expected that the N15trn fund is channelled into critical infrastructure, which will open up sectors and markets, as infrastructure challenges have been one of the major factors hindering some critical sectors’ growth in Nigeria,” Jaiyeola said.
He noted that with several infrastructure initiatives already being conceptualised in various sectors, especially the gas infrastructure fund and the host community development fund embedded within the PIA, the N15trn infrastructure fund should complement and align with the plans and projects.
