To help address the huge infrastructure deficit in Nigeria, the World Bank is poised to provide $200 million as a seed fund to set up a Financial Intermediary Loan (FIL) scheme under the Public Private Partnership (PPP) initiative.
Head, Legal and Governance, Infrastructure Concession Regulatory Commission (ICRC), Mr. Joe Ohiani, disclosed this at the inaugural ESQ Project Finance Summit, held in Lagos, and stated that some other development finance organisations have also agreed to contribute to the scheme.
He added that eligible participating financial intermediaries, particularly commercial banks with Africa Finance Corporation (AFC) as the lead, will lend to qualifying private sector partners in a Public Private Partnership (PPP) project at the financial intermediaries' risk.
He however emphasised that the objective of the scheme is to provide long term funding for infrastructure development in the country.
He stressed that in selecting eligible projects, priority would be given to public investment programmes which are in accordance with the national policy on PPP and captured in the federal government Medium Term Sector Strategies and the National Infrastructure Plan of the Vision 20:2020.
Presenting a paper titled, 'Governmental Promotion of Infrastructure Development,' Ohiani bemoaned the deplorable state of infrastructure in the continent as revealed by a recent report of the World Economic Forum.
The report showed that though annual investment in infrastructure in Africa doubled from $17 billion to $35 billion between 2001 and 2009, the overall infrastructure spending needs for sub-Saharan Africa is estimated at $93 billion annually over the next decade.
He noted that the annual infrastructure investment gap of $31 billion offers huge opportunities for private sector finance in infrastructure developments in Africa. "Governments in Africa are taking active steps towards addressing the state of infrastructure in the region," he added.
On the state of infrastructure in the country, Ohiani expressed regret that the federal government has been the sole financier of infrastructure projects and has often taken responsibility for construction, operations and maintenance, stating that the national fiscal budget was the principal source of financing infrastructure development.
He disclosed that between 1999 and 2007, government spent about N2 billion through direct budgetary allocations on basic infrastructure in agriculture and water resources, transportation, education, health, power generation and distribution. He also warned that declining financial resources was making this option less feasible, thereby accelerating infrastructural deterioration.
Ohiani further stated that despite challenges such as getting the Ministries, Departments and Agencies (MDAs) and private sector partners to abide by the PPP guidelines, ICRC would bring 20 projects to the market before the end of the year.
"We have developed a robust database of concessions already entered into by the Federal Government. Also we are promoting the development of funding sources and instruments with long tenor for financing infrastructural projects and we are also working with National Planning authorities to integrate infrastructure in its framework," he added
Speaking earlier, CEO, ESQ Seminars, organisers of the summit, Mr. Lere Fashola, said the aim of summit was to take a critical review of different near-term or completed projects across Africa, recent legal and legislative developments in different countries as well as the challenges of the bidding process in the electrical and power sectors, and governmental promotion of infrastructure development projects.
Other speakers including Resident Representative, African Development Bank (ADB), Mr. Ousmane Dore, and Senior Vice President, Power, Africa Finance Corporation (AFC), Baldeh Baatchi, pledged support of their organisations to the development of infrastructure on the continent.