Absence of Data on Nigeria's Infrastructure Gap Makes Planning A Nightmare - Olufemi Awoyemi

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Friday, December 07, 2019 / 5:00 PM /  Ottoabasi Abasiekong for Proshare WebTV / Header Image Credit: WebTV

 

Nigeria's productivity hinges on a robust infrastructural framework that can drive efficiency. The Chairman of Proshare, Mr. Olufemi Awoyemi,  said this as a keynote speaker at the second edition of the Nigeria Infrastructure Development Awards, NIDA in Lagos. 


While speaking on the theme "Creative Options of Funding Infrastructure Development in Nigeria," Mr. Awoyemi said that one of the challenges the country faces was the absence of accurate information. He also pointed out that uncertainty about the precise size of the infrastructure gap in Nigeria made planning a nightmare.  


He observed that evidence-based information on Nigeria's infrastructure requirements would create room for an adequate policy framework and masterplan to compel sustainable growth and development.  


Mr. Awoyemi reiterated the need for a framework that creates a distinction between bankable and unbankable projects in the country. 


Speaking further, the financial analyst stressed that investment in infrastructure is not an asset class, but a long-term commitment to capital formation.


Giving some analysis, he said the global infrastructure financing gap stood at about $2.7trn, while the emerging economies have, in the last three years, attracted about $335bn in terms of direct investments. 


He outlined the "ALS" principle in infrastructure development, which relates to Assets, Lifecycle and the Sovereign. 


In respect to Assets, there are core assets like roads, bridges, rails, new technologies, new technologies and the Greenfield (windmill, solar, renewable)


Lifecycle: The Lagos-Ibadan expressway is one project that defines a lifecycle that has spanned over four decades. 


Sovereign: Under the sovereign, there is the delineation between Developed and Developing Economies, and there is a challenge that people don't understand that there is a mismatch between opportunities and capital.


He highlighted the following as the major ways developing economies like Nigeria fund infrastructure;


  • Tolls: In the case of Nigeria there are not many things to toll at the moment
  • Concessions: In this aspect, the concessionaire takes the risk in the investment
  • Currency Regime: In this case, the currency regime does not favour the nation, but that of the foreign investors to protect their capital.


In investing in infrastructure, financiers, according to him, are only worried about the risk and return on their capital. 


He raised the need for Nigeria to identify the key projects that it needs, more airports, rails, roads or ports. 


According to him, it was important for Nigeria to address the productivity issue through its infrastructure because it will reduce the cost of overall production.


The analyst made a strong case for investments in research and development, which is a critical component of infrastructure in any progressive environment.


In his opening remarks, the Chairman of the Nigerian Infrastructure Development Awards Committee, Mr. Lanre Alabi, said that the event was organised to honour firms and government agencies that had contributed to infrastructural development in the country.


He said NIDA was committed to recognizing innovative efforts and strides towards funding infrastructure.


The Federal Road Management Agency, FERMA, Nigeria Communications Commission, NCC, and the Central Bank of Nigeria (CBN) emerged winners.


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