The federal
government yesterday said it would seek N464 trillion ($2.9trn) from the
Nigerian capital market vehicle to mobilise both domestic and foreign investors
for long-term capital projects (N464 trillion) to bridge infrastructural gap in
the country from now till 2043.
Speaking at
the Securities and Exchange Commission (SEC) Infrastructure Roundtable, the
Minister of State for Finance, Dr Yerima Ngama, said that the federal
government along with other stakeholders have worked out a National Integrated
Infrastructure Master Plan which will require N434 trillion over 30 years.
He noted
that the initiative to develop a 30-year integrated infrastructure master plan
for Nigeria could not have come at a better time because infrastructure is the
life blood of any economy.
According to
the Director General of SEC, Arunma Otteh, Africa Development Bank (AfDB)
estimates that Nigeria’s infrastructure needs about $350 billion over the next
ten years. “Clearly, traditional funding sources are unable to cover this huge
gap. Infrastructure projects require long-term funding at reasonably low rates
as the Nigerian banking industry currently offers high interest rates and short
tenures while foreign loans come with attractive conditions, but expose a
country to foreign exchange risk.”
She noted
that the Nigerian capital market can mobilise an appreciable amount of domestic
capital in the hands of private investors to reduce the infrastructure deficit.
She added
that there were significant amounts of capital with pension funds, soverign
wealth funds, insurance companies, high net-worth individuals and other
investors. Arunma noted that the Nigerian government has earned almost $3
billion from the sales of power assets, hoping that the privatised power
companies will list on the Nigerian Stock Exchange (NSE).
She stated
that SEC recently approved Nigeria’s first infrastructure fund, called the
Nigerian Infrastructure Investment Fund worth about $100 million, and added
that “we expect this product to be a major attraction for our $20 billion
pension fund industry.”
She pointed
out that securitisation is another promising way to finance infrastructure
given its wide use and global market size of over $10 trillion having been used
to finance iconic infrastructure assets such as M6 Toll in the United Kingdom
and housing in other parts of the world.
“We believe
that securitisation broadens the options for infrastructure finance in Nigeria
and we are developing regulations and market expected to be approved before the
end of 2013 to spur the development of this product in our market”, she said.
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