Nigeria's infrastructure gap remains a critical
bottleneck that continues to undermine the country's economic potentials. Thus,
different suggestions have been put forward as measures to spur improvement in
the decrepit state of infrastructure. While major bodies like the International
Monetary Fund (IMF) and African Development Bank (AfDB) have estimated that the
infrastructure gap would require c.$3.0tn to close, the Secretary-General of
the Federation, Boss Mustapha has stated the Federal government is looking to
spend $2.3tn over 23 years (2020 - 2043) to close the gap. This is according to
the National Integrated Infrastructure Master Plan (NIIMP), a 23-year master
plan originally developed in 2012 and reviewed in 2020.
The NIIMP paper is expected to see significant investment in major sectors of
the economy, considering the widespread nature of the infrastructure gap across
sectors. For example, the energy sector will gulp the most, with $759.0bn
expected to be spent while the transport sector will see $575.0bn spent to
revamp the infrastructure network. That said, we note the project is as usual very
ambitious but we remain concerned about the funding source for these projects.
Possible sources of finance have been identified, including: government budget,
government borrowing, the Sovereign Wealth Fund, & Pension Funds and
private sector partnerships.
Looking ahead, we believe any meaningful improvement in the state of
infrastructure will require significant private sector participation as the
federal government remains clearly unable to fund these capital projects. This
would enable access to increased funding and improved maintenance culture
considering these projects would be revenue-generating (to help investors
recoup investments). Also, the successful launch and operation of Infraco
(Nigeria's infrastructure company), will play a critical role. That said,
resolving the infrastructure challenge would significantly help to improve
prospects of achieving the economy's potentials.