News Summary:
- The Infrastructure Corporation of Nigeria (Infracorp) is stalled due to the Central Bank of Nigeria’s delay in disbursing N1 trillion seed funding.
- Infracorp, established to address Nigeria’s infrastructure gap, is awaiting initial investments to begin operations and raise additional funds.
- Experts suggest that domestic capital mobilization is crucial for bridging the infrastructure deficit and attracting foreign investments.
The Central Bank of Nigeria (CBN)’s delay in delivering the promised N1 trillion seed funding is impeding the full establishment of the Infrastructure Corporation of Nigeria (Infracorp).
This state-supported investment entity, aimed at transforming Nigeria’s inadequate infrastructure, is co-funded and established by CBN, the Africa Finance Corporation, and the Nigeria Sovereign Investment Authority.
A reliable source disclosed that the delay in providing each of the appointed fund managers – Sanlam InfraWorks, Africa Infrastructure Investment Managers, a consortium of Afrinvest Asset Management Africa Plus Fund Partners and ARC Asset Management, and Chapel Hill Denham – with N250 billion has put Infracorp’s operations on hold.
Infracorp, once funded, will be tasked with generating an additional N14 trillion in phased amounts, according to another source.
Infracorp’s primary focus is to address Nigeria’s infrastructure gap and stimulate growth across key sectors through public-private partnerships. This is achieved by initiating, managing, and executing bankable projects for infrastructure development. It also aims to tackle under-investment and underemployment issues by backing financial structuring, project development, and private capital mobilization.
Despite boasting a population of over 200 million, Nigeria’s infrastructure stock amounts to just 35% of its GDP. This is far below the 87% of South Africa and the 70% average of emerging economies. This investment deficit has restricted Nigeria’s growth potential, limiting its capacity to utilize its abundant natural and human resources effectively.
According to the Nigerian Investment Promotion Commission, Nigeria requires an investment of over $2.8 trillion in infrastructure over the next three decades. Experts at the Chapel Hill Denham Investing in Development conference advocated for the mobilization of sufficient domestic capital to address Nigeria’s significant infrastructure deficit that has been a barrier to private investments and economic growth.
Phil Southwell, a partner at Chapel Hill Denham, emphasized the untapped potential of the Nigerian domestic market to fund infrastructure projects. Lazarus Angbazo, CEO of Infracorp, echoed this sentiment, highlighting the importance of attracting domestic investors to infrastructure projects.
Andrew Alli, former CEO of the Africa Finance Corporation, emphasized the role of local investment in attracting foreign capital. He criticized the government’s current practice of soliciting local investment in dollars, stating that this would deter local investment.
Despite the challenges, Karl Toriola, CEO of MTN Nigeria, expressed confidence in the domestic telecom sector’s ability to drive double-digit growth, thanks to the creativity and innovation of Nigeria’s young entrepreneurs.