Nigeria requires a whopping $3 trillion to bridge its infrastructure gap over a 30-year period, Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said on Monday.
Speaking at one-day workshop on Maximising Finance for Development (MFD) of Infrastructure in Nigeria organised by the World Bank Group in Abuja, she said the cash amounts to roughly $100 billion per year.
“With a total federal budget of less than $30 billion for 2019 and the dependency of Nigeria’s income on oil revenue with unpredictable global price fluctuation, Nigeria no doubt, lacks the fiscal space to self-finance the required infrastructure investment,” she said.
The minister said the investment required to bridge this huge infrastructure gap has been planned to be financed through both public and private sector participation.
Mrs Ahmed said: “The private sector is expected to cater for about 48per cent of the investments which will account for assets that are fully owned and financed by the private sector itself. The remaining 52per cent of the required investment is expected to be financed from a combination of public and private sector for the first phase of the implementation.”
The private sector is also expected to play a key role in providing critical infrastructure, either directly through privatisation or in collaboration with the government under public private partnership (PPP) arrangements.
“There are four primary financing options: governments budgets; public debt; other public sources (e.g. Sovereign Wealth Fund, Public Pension Fund); and PPPs, available for financing the investments,” she said.
In addition to already committed private sector investments, she said government is strategically considering how much, on project-by-project basis, to leverage from the primary financing options to ensure optimal risk allocation.
Mrs Ahmed commended the effort of the World Bank Group for the timely intervention on infrastructure developmen. “The Federal Government has created an Infrastructure Project Development Facility to finance early project development activities so as to create a pipeline of bankable PPP projects, establish a dedicated cash backed fund (Government Resource Fund) outside the annual budgetary allocation process to finance the government’s contributions on infrastructure involving the private sector,” the minister explained.
Giving an overview of Nigeria’s infrastructure gap, Mrs Ahmed said the country’s core infrastructure stock is currently estimated at 30per cent of the gross domestic product (GDP) which falls far short of the international benchmark of 70per cent.
She said the effect of weak infrastructure is most striking in the energy and transportation sector. The two sectors, according to her, are key to national and economic development due to their multiplier effect across all sectors of the economy.
The minister said increased private sector participation, through both PPPs and full privatisation, is required to decrease the burden of the required infrastructure investments by the public sector.
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