As much as N464trillion ($2.9trillion) will be borrowed from the Nigerian capital market from domestic and foreign investors to provide long-term capital for infrastructural projects between now and 2013.
This was disclosed by the Minister of State for Finance, Dr. Yerima Ngama yesterday at an Infrastructure Roundtable organized by the Securities and Exchange Commission, who mentioned 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.
The Director General of SEC, Arunma Otteh, in her remarks, quoted the Africa Development Bank (AfDB) as estimating 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 said.
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.