INFRASTRUCTURE SHORTAGE &

INVESTMENT OPPORTUNITIES (A CASE OF NIGERIA)

Country Key Indicators for Nigeria

Nigeria’s major sore thumb Inadequate & lack of Infrastructure!!!The growth and

income potential from infrastructure in Nigeria and other emerging markets has been largely inhibited by congestion, poor operations or maintenance culture with regards to facilities or what can be better described as a “tragedy of the commons” situation.

Nigeria’s Global Infrastructure Ranking

While it is clear that inadequate or lack of infrastructure is a major impediment to all-inclusive growth, available data from the World Economic Forum indicates that Nigeria’s infrastructure ranking is at the lowest levels almost comparable with that of failed and poverty stricken states like Somalia and Sudan.

The Financial needIn a recent report by the Institute of appraisers and cost engineers published in the Vanguard newspapers of September 8th 2015, it was revealed that Nigeria’s Infrastructure master plan would require a minimum of $2.9 trillion dollars in aggregate investments to successfully manage Nigeria’s infrastructure deficit.

Investment opportunity?

Growth sectors will continue to create demand for infrastructure investment.

Connections to road, rail and public transport are vital for urban success.

Doing business in Africa remains a challenge as infrastructure lags well behind the rest of the world, but there are distinct regional differences.

Recent PwC research suggests that infrastructure spending in sub-Saharan Africa will exceed US$180* billion per annum by 2025, a growth rate of 10% per annum.

Major infrastructure investment programmes in Nigeria and South Africa are now being accompanied by significant projects in other countries like Ghana, Kenya, Mozambique and Tanzania. However, a huge shortfall in government funding creates opportunities for private investors to support this development need through direct investment and public-private partnership (PPP) agreements.

Courtesy PWC’s Real Estate 2020: Building the future of Africa

Where and how much?

Graph Indicating projects and capital invested in Africa as at September 2012 Courtesy E&Y’s BMI

How to Harness the opportunity??Capitalizing on the influence of government policy and

legislation to reduce corruption and increase efficiency

Establishment or set up of infrastructure investment funds Using existing sources of funds from multilateral agencies to attract the private sector and its desire to match risk with the decision to invest will increase infavour of infrastructure projects

Effective use of public and private partnership

agreements that facilitate the delivery of services and needed infrastructure that are aligned to both government and private sectors’ strategic needs.

Proposed Solutions Establish privately managed infrastructure investments funds backed

by a “divestiture Infrastructure development strategy or DIDS”, with the rationale being the shift from government ownership and financing of infrastructure projects to private operations aimed at moving the delivery of public services from inefficient, debt ridden, and subsidy prone state owned enterprises to self-supporting private project financing institutions.

This will reduce the burden on the government’s budget deficit and expand coverage of private services to facilitate economic growth and the essential and much needed development.

The strategic drive of attracting enhanced and structured long term private capital through PPP’s and domestic funding sources will be driven by the methodic application of certified and rigorous project preparatory work models via engagement of financial, legal and technical advisory for due diligence purposes and quality construction development as “Bundled Public Private Partnerhips” or BP3’s.

The Expected End

References “Infrastructure spend and investment in Africa” (Actual in relation to

Needed Courtesy the Infrastructure Journal 2014)

PWC’s Real Estate 2020 report: “Building the future of Africa”, March 2015

The “Business Environment and Competitiveness across Nigeria States” (BECANS) 2012 report published by the African Institute of Applied Economics, Enugu Nigeria

The “where to Invest in Africa” guide 2014-15” Published by Rand

Merchant Bank

World Economic Forum’s “Global Infrastructure Ranking 2015”

Gilt Advisory’s Information Memorandum on “Bundled Public Private Partnership Infrastructure Investment Fund” September 2015