CBN supports power, gas infrastructure with N424.14bn

*Nigeria’s infrastructure must improve by 5% annually to boost productivity-Emefiele

Motolani Oseni

As part of efforts to improve the power and gas infrastructure in the country, while reducing the nation’s estimated $100 billion annual infrastructure deficit, the Central Bank of Nigeria (CBN) has said it has given out not less than a total sum of N424.14 billion.

This is even as the Governor of CBN, Mr Godwin Emefiele has disclosed that the country’s infrastructure has to improve by at least between 5 to 7 per cent for it to stimulate productivity and sustainable growth for businesses.

Mr Emefiele, who was represented by the apex bank’s Director, Corporate Communications, Mr Osita Nwasinobi, made this disclosure while giving the keynote address at the Finance Correspondents Association of Nigeria’s (FICAN) 30th-anniversary conference and awards which had the theme: “Financing Infrastructure & SMEs for inclusive growth in the post-COVID-19 economy”, which was held in Lagos on Saturday.

According to him, in Nigeria, the current level of infrastructure deficit is a major constraint to economic development and attainment of growth average rate of at least 5 to 7 per cent required to boost productivity and sustainable growth for businesses.

Quoting the World Development Indicators 2019 report, he said, 56.20 per cent of Nigerians have access to electricity, while electric power consumption stood at 144.52 kWh per capita as of 2018, while infrastructure deficit in Nigeria is estimated to be about 1.2 per cent of GDP.

To stem this gap, he said, the CBN in line with its developmental mandate to stimulate finance to infrastructure development in Nigeria, had developed and introduced lowinterest and long-term finance interventions in tandem with the gestation periods of infrastructure projects.

To him, “the design of the interventions was hinged on the need to develop enabling infrastructure in critical sectors to drive economic growth and development.

To support the resilience of the real sector, the Bank’s financing interventions include the Nigeria Electricity Market Stabilization Facility (NEMSF), which has disbursed N336.88 billion to support the development of enabling infrastructure in the energy sector by financing massive capital expenditure (Capex) in the sector.

“The intervention has also contributed to the increased electricity generation to 5,195 MW through the additional 1,403.3 MW of electricity generated, of which 944.3 MW new capacity was added from financed power projects.

“To provide liquidity support to electricity distribution companies (DisCos) and improve revenue collection efficiency, the CBN released N41.06 billion for the procurement and installation of 657,562 electricity meters across the country, under the National Mass Metering Programme (NMMP).

“Equally, N7 billion has been released under the Solar Connection Facility (SCF) to facilitate the procurement and installation of 100,000 solar home systems; and N39.20 billion to support the development of enabling infrastructure to optimize the domestic gas resources for economic development under the bank’s Intervention Facility for the National Gas Expansion Programme (IFNGEP).”

He, however, noted that, despite the efforts by the apex bank to address infrastructural challenges, “these are just a drop in the ocean, as the US$100 billion annual investment required for infrastructure development cannot be solely financed by the CBN.

“Bearing the importance of quality infrastructure to economic growth, the fiscal authorities and private sector have roles in the ecosystem, with innovative financing options explored.

The Sukuk bond market has provided a substitute for the traditional interest-based financing options and has been used to finance critical infrastructural project across the country.

“Public and Private Partnership (PPP) also provides an alternative to finance infrastructure projects, thereby easing budgetary constraints and improve operational efficiency by leveraging private sector’s expertise and robust financing options.

This PPP option is yet to be fully explored in Nigeria, despite its popularity in other emerging economies, particularly Brazil and India,” he pointed out.

Meanwhile, the Managing Director/CEO, Heritage Bank, Mr Ifie Sekibo, who was represented by Olusegun Akanji, Divisional Head, Strategy and Business Solutions, argued that the government cannot solve the country’s infrastructure challenges, noting that it is the private sector that will deliver the solution.

The government can only provide enabling policies that will support private sector interventions.

We need the global private sector intervention to help us achieve a vision of infrastructural development,” he mentioned.

Mr Ifie noted that until the country developed an identity management system that delivers value to the citizenry, SMEs will continue to grapple with financing challenges.

On his part, Managing Director of FMDQ Group, Mr Bola Koko, represented by the Head Private Market, Yomi Osinubi urged Nigeria to conceive a way its domestic capital market could fund the international capital market.

That, he said, was the only way that we could pluck the infrastructure rewards.

“If we want to pluck our infrastructure rewards, first of all we have to conceive of a way our domestic capital market can actually fund capital market.

“But the investors in debt capital market international and debt, money will come into an environment where capital is expected and there is an expectation of good management of those resources and cash flows will come back to it.

“So I think there’s the issue of maybe an underlying structure where we want to put in capital like road infrastructure tax payment”, he said.

Executive Commissioner, Mr Temidayo Obisan, who represented the Director General of Securities and Exchange Commission (SEC),advised that the nation connected the right duration of money which according to him would be long-term.

“The major thing to identify is that infrastructure is a long-term thing, so it Is essential we connect the right duration of money which is long term capital which is what capital market provides and which sec as a regulator should.

“We have about three surviving infrastructure focus funds in Nigeria now that are totaling almost a 100bn, itching about 90 billion at the moment and there are some that are registered programmes of 200billion,” he said.

More so, the Chairman of FICAN, Titus Chima Nwokoji, said if Nigeria’s infrastructural gap, which is estimated to be N36 trillion annually, is addressed, a lot of the country’s economic challenges will be easily tackled.