Nigeria’s minister of finance, Kemi Adeosun’s, recent call for a boost in infrastructure investment presents a key opportunity for the private sector in Nigeria.
The historic chronic under-investment in infrastructure in Nigeria has long been seen as the main impediment to growth and on the back of the fall in crude prices, Nigeria has seen its revenues nose-dive, leading to its first recession in 25 years and to widespread calls for a change in economic policy.
The announcement that the government intends to borrow USD30 billion in order to finance major infrastructure projects across Nigeria shows a shift away from its traditional consumption-driven model of economic growth, which relied heavily on oil revenues, to an investment-driven approach with infrastructure development at its core. The boost in capital spending dedicated to infrastructure (up to 30 percent from 10 percent) will cover crucial sectors such as power, transport and water and is aimed at underpinning growth in agriculture, mining and manufacturing.
Adeosun acknowledges that Nigeria’s debt profile is unbalanced (with a heavy domestic focus at a high cost and too short a tenure) and calls for longer-term and cheaper financing solutions to support this change in economic policy. This presents an ideal opportunity for the private sector to provide innovative financing and technical solutions in partnership with the federal government to assist in the delivery of the significant infrastructure developments required across the country.
A public-private partnership (PPP) model has been championed as a sustainable and efficient mode of financing infrastructure development in Nigeria and could be used to concession important assets like port terminals, airports and roads to the private sector to enable them work effectively and reduce the current extensive financial burden on the government.
What is clear is though is that any such public-private cooperation will need the highest levels of political support and transparency to attract sufficient private sector interest and to ensure that the infrastructure investment is delivered in a manner that supports Nigeria’s long-term growth ambitions.