The Nigerian government would have to commit about $3 trillion into infrastructural investment for the next 30 years to close the infrastructure gap, according to the Minister of Finance, Mrs. Zainab Ahmed.
She said that only by such quantum of investment, would Nigeria be able to match the pace of her rapidly growing population, and increase the current infrastructure stock from 30 per cent of the GDP to at least 70 per cent by the year 2043.
Speaking yesterday in Abuja at a one-day workshop on Maximizing Finance for Development (MFD) of Infrastructure in Nigeria organised by the World Bank Group, Ahmed added that, “it is estimated that $3 trillion infrastructure investment would be needed for the next 30 years, and provides the framework that will guide interventions, investments, as well as budgetary allocations to the sector for the period”.
“Nigeria requires an estimated sum of $3 trillion to bridge its infrastructure gap over a 30-year period. This amount 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 stated.
Ahmed said that despite all the comparative advantages in natural and human resources, Nigeria’s ability to fully actualise its economic growth potential is repressed by the country’s huge infrastructure gap, recalling that it was in an effort to address the issue that the Nigeria’s National Integrated Infrastructure Master Plan (NIIMP) was approved in 2014 as a policy document which was designed to provide the roadmap for building a world class infrastructure that would guarantee sustainable economic growth and development.
Giving an overview of Nigeria’s infrastructure gap, the Honourable Minister said that Nigeria’s core infrastructure stock is currently estimated at 30 per cent of the GDP which falls far short of the international benchmark of 70 per cent. The effect of weak infrastructure, she noted, 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.
“Nigeria has an average electricity consumption per inhabitant of 150kwh (kilowatt/hour) as against over 3000kwh world average (WBG). The current power generation of less than 10GW (Gigawatt) is less than half of the projected 20GW of generation capacity by 2018 which is expected to be increased to 350GW by 2043. To achieve this target, an excess of 10GW of generation capacity is expected to be added every year for the 30 years’ period of NIIMP (2014-2043)”.
On road network, she said Nigeria is ahead of the West African average, but behind the international and the Britain, Russia, India, China, and South Africa (BRICS) benchmarks.
“Looking at the individual sectors, the largest investment needs are in energy and transport, which represent more than 50 per cent of the required infrastructure investment”, she said further.
Considering the financing plan with the infrastructure gap in mind, the Minister stated that the investment is planned to be financed through both public and private sector participation.
“The private sector is expected to cater for about 48 per cent of the investments which will account for assets that are fully owned and financed by the private sector itself. The remaining 52 per 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 expected to play a key role in providing critical infrastructure, either directly through privatization or in collaboration with the government under public private partnership (PPP) arrangements,” she said.
She identified four primary financing options which include, governments’ budgets; public debt; other public sources (e.g. Sovereign Wealth Fund, Public Pension Fund); and PPPs, available for financing the investments.