InfraCo as gateway to private sector-led growth


By Amechi Ogbonna

In December, 2021 when the Federal Government inaugurated the Infrastructure Corporation of Nigeria (InfraCo), it was basically to serve as the Central Bank of Nigeria(CBN’s) special purpose vehicle for infrastructure development in the country. The establishment of this SPV has been necesitated  by the huge infrastructure gap across the country and the need to play the catchup game.

Consequently, the InfraCo was conceived as a dedicated privately-managed infrastructure and industrial vehicle to harness opportunities for Nigeria’s infrastructure development by originating, structuring, executing and managing end-to-end bankable projects in that space.

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It’s takeoff capital of N15 trillion is symptomatic of the Nigerian government’s commitment to close the yawning infrastructure financing gap in the country as it is projecting that a minimum of 50 percent of the entire funding would come from the private sector.

CBN Governor, Godwin Emefiele has said at it’s official launch that the InfraCo was already working on three major projects, namely the Abuja -Kano Road the 2nd Niger Brigde, and the Lagos-Ibadan Expressway.

Only recently in Lagos, the Governor also said the InfraCo will commence massive road infrastructure projects around the Lagos Free Zone (LFZ) area to decongest traffic along the Apapa & Tin Can Island ports.

There is indeed no gainsaying it that the benefits of these infrastructure interventions to the economy, the host communities and ordinary citizens of this are immeasurable while its impact in terms of cost-saving, time management as well as the ease of movement of goods and persons would trigger more economic diversification.

The enormity of Nigeria’s infrastructure challenge is further underscored by the fact that despite being largest economy in Sub-Saharan Africa, with a population of over 200million people, it still parades the least stock of critical economic infrastructure.

In the power sector for instance, the country is believed to have an installed capacity for 12,500 MW, but delivering only 4,500 – 5,000 MW, compared to 58million South Africans producing 58,000 MW or Brazil with 212million population producing 568,000 MW. 

On per capita KW basis; Nigeria per capita power consumption is Nigeria– 24KW; South Africa – 1,000KW (X40times); Brazil – 2,700KW (X103 times). 

But energy experts insist that the appropriate level of power production for Nigeria should be 100,000 MW.

How this lofty goal would be achieved remains one of focal points for board and management of the newly inaugurated InfraCo as they hit the ground running.

On road network and highway, Africa infrastructure development index 2020, revealed that Nigeria’s stock of infrastructure is 23 percent of its GDP, compared to Egypt’s 88 percent, South Africa’ 79 percent Mauritius Tunisia’s 71 percent , Morocco’s 67 percent and Ghana’s 30 percent

In a presentation at Akure the Ondo State capital at the weekend, a professor of Economics , Ken Ife, observes that Nigeria’s infrastructure deficiency places a huge burden on businesses, thereby moving it from the lowest ‘official tax’ to the highest ‘implicit tax’ in Africa..

He said “infrastructure is so critical to foreign investment flow; for wealth creation, employment generation and sustainable poverty reduction, hence the urgent need to leverage private sector in PPP models”.

According to Prof Ife, besides the urgent need to continue to invest in infrastructure and human resource development to create and sustain employment, three additional existential challenges of pervasive and devastating impact of the asymmetric conflict in Nigeria’s 6 geo-political zones, draining Govt budget (22 percent of 2022 Federal Govt Budget) created huge deficit being financed by borrowing and huge debt service, which in 2021, was 70 percent of Govt revenue !!. Do nothing, is clearly not an option as Nigeria could easily be overrun like Afghanistan.

COVID -19 was a matter of life and death, and the health hazard, supply chain disruption, death, redundancies, unemployment, under-employment and the deepening poverty, required urgent quantitative fiscal, monetary and humanitarian interventions.  It simply translated to increased borrowing.  Ways and Means Overdraft to Government by Central Bank is believed to be well in excess of ten trillion Naira(N10tr).  No doubt, that will increase domestic money supply, and add to domestic pressure on inflation, besides the preponderance of structural factors.


“The Infrastructure Plc is the answer to private sector engagement in the public infrastructure landscape.  It has been capitalised by the Federal Government to the tune of one trillion naira, (N1trillion) and heading out to the capital market to raise up to fifteen trillion naira (N15 trillion).

With these resources, they would be better placed to address the economic diversification agenda from the infrastructure perspective”.

Commenting on the benefits of financing critical infrastructure to businesses and the Nigerian economy, Chief Obinna Anyanwu, Chairman, Financial Services Group of the Lagos Chamber of Commerce and Industry (LCCI), acknowledged that the novel InfraCo idea was a wonderful initiative given the country’s highly dilapidated infrastructures and deficits in a huge economy like ours.

“For me, I believe the starting point should be to address energy infrastructures to ensure we achieve 24 hours power supply nationwide. We need adequate and stable energy supply to turbo -charge our economy and give it wings to fly. It is long over due, this will not only embolden and encourage domestic investors but will also bolster foreign investment. The N15trillion will merely scratch the surface, so we need to quickly leverage it to raise about N150trillion to make a mark.

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I also expect that this will be professionally run with emphasis on corporate governance and transparency in order to attract the much talked about private investor investment to get on board to support this noble initiative.

Also commenting, Mr Frank Onyebu, Chairman, Manufacturers Association of Nigeria (MAN), Apapa branch said

“ I have no doubt that the Infrastructure Corporation, InfraCo, if we’ll managed, will be the recipe Nigeria needs for massive infrastructural development. I strongly believe that the only way real development can be achieved in a sustainable way is for governments at all levels to hands off businesses which can be better managed by the private sector. The government has shown over the years that it cannot manage businesses. It is not equipped to do so but should rather focus on providing the enabling policy environment to help the private sector run businesses.”

According to Onyebu, “the impact of functional infrastructure cannot be overemphasised. It has a direct impact on the economy and the general well-being of the populace. It is a known fact that investments and jobs flow with infrastructure. I expect a threefold growth in both local and foreign investments if there is a massive overhaul of our infrastructure. This will not only open up previously inaccessible communities but will create employment for the teaming youths who would otherwise take to banditry and other crimes.

The benefits of a functional infrastructural network are numerous:

For instance, agricultural activities will pick up with farmers being able to evacuate their products to the markets in the cities and elsewhere while factories will be set up in the villages leading to a reduction in rural to urban drift. I also expect an improvement in the security situation due the reduction in unemployment and improvement in the well-being of the populace.

Overall, Onyebu argues that the setting up of InfraCo will lead to reduction in the cost of infrastructure arising from the reduction in corruption, elimination of waste and improvement in efficiency.

For his part, Chief Executive Officer, Centre for the Promotion of Private Enterprises (CPPE), Dr Muda Yusuf also admitted the infraco initiative was laudable.

He said “ Infrastructure deficit is perhaps the biggest problem we have as a nation. No efforts or resources will be too much to commit to it. If the CBN has more room to boost investment in infrastructure, why not. We should welcome it. Infact, infrastructure challenges is one of the reasons the intervention funds have not been able to make the desired impact on the economy. If we fix Infrastructure, alot of things will fall into place. Infrastructure masterplan indicates that we need to commit $100 billion annually for three decades before the deficit in infrastructure can be fixed. This shows the magnitude of the problem.

The beauty of infraco initiative is the involvement of the private sector. We are likely to see greater level of efficiency and cost effectiveness both in the execution and management of the infrastructure.

Speaking in Akure, Ondo State capital at the 32nd annual Seminar for Finance Correspondents and Business Editors themed: ‘Exchange Rate Management and Economic Diversification in Nigeria: The PAVE Option’ the experts hinted that going by government’s borrowing plans, a fresh N6.3 trillion debt may be added to the current debt stock of N39.556 trillion ($95.779 billion as at December 31, 2021) to ultimately push the country’s total debt stock to N45.86 trillion by December 2022.

Notwithstanding this unhealthy trend, they argued it was high time the country invested more in boosting local production and export oriented infrastructure before the huge debt burden sinks the country.

In his presentation, a Professor of Economics and member of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), Prof Mike Obadan, expressed concern that Nigeria’s debt stock was becoming an issue that calls for more drastic approach to support the fiscal and monetary authorities to tow the nation’s economy out of the doldrums.

He lamented the parlous state of the economy, which he said was a key reason behind naira’s persistent weakness against other international currencies over the years.

He said: “You can’t convert the naira because of the status of Nigeria’s economy. You must have a stock of reserve to back it up at any time but we don’t have that for now, amid this huge sovereign debt stock”.

Also speaking, another economist and Consultant to the Economic Community Of West Africa States (ECOWAS), Prof Ken Ife, stated that the huge funds the Federal Government spends on debt servicing by the Federal Government actually calls for concern.

“We are planning to borrow N350trillion in the next three years, (2025). Out of the figure, all levels of government are preparing to pay only N50trillion, while they are looking up to the private sector to go and cough out N300trillion. What is it that we are looking to borrow for in this sector?” He questioned.

Prof Ife however called on the government to tow the line of Saudi Aramco by listing the Nigerian National Petroleum Company Limited on the stock exchange to enable more private investors bring the much needed funds for infrastructure development rather than a recourse to overseas or domestic borrowing.

According to him equity borrowing rather than interest bearing loan should see nigeria off its current debt overhang.

He also lamented on the infrastructure decay in Nigeria.