Infrastructure is central to every aspect of our national life. Improving infrastructure is not only critical for economic growth, but essential in ensuring the improved wellbeing of our people. Empirical research over the years has shown that there exist a strong link between infrastructural development and increased productivity. Productivity in Nigeria is low. No thanks to our confounding infrastructural deficit.
Reports from World Bank revealed that from now through 2030, at least $57 trillion will need to be expended to build infrastructures ranging from ports, power plants, rails, roads, telecommunications, water systems, and other litany of facilities that the global economy needs. For developed nations of the world, the priority is to renew waning infrastructure; for emerging ones such as Nigeria, the focus is to build the infrastructures required to support growth. This is apparent in the deterioration of our state-owned roads and federal highways, the dearth of our public transportation systems, under investment in affordable housing and social infrastructure, and the skyrocketing of environmental menace.
Making a case to invest in infrastructure is long overdue. The positive economic benefits of stronger infrastructure spending can never be overemphasized. It supports jobs and businesses, leading to lower levels of unemployment and increased economic growth. Also in the long run, competitiveness of private businesses will be enhanced, thereby leading to wealth creation and higher standard of living. Furthermore, increased investment in infrastructure will not only impact directly on the economy but will also spread through the economy through a chain of multiplier effects like curbing rural-urban drift.
Pertinent to also state that infrastructure spending generates a positive economic return before projects are even completed, as the construction stage alone generates enough economic activity to almost justify the expense, even though the real economic benefit of public infrastructure is the long-term effect it has on productivity and business competitiveness – key mechanisms of a developing economy for which Nigeria is one. Improved infrastructure would lower the cost of doing business in Nigeria thereby allowing for higher rates of private investment and ensuring that Nnamdi’s company in Onitsha, Adekunle’s firm in Lagos and Tanimu’s establishment in Kano can grow, and overtime, become competitive on the global stage.
The sad news however is that Nigeria would require about $8 billion annually to bridge her huge gap in public infrastructure. It is quite obvious that the country is at the precipice. Some reports have it that only 18 percent of the nation’s 197,000 kilometres of federal roads network which conveys 90 percent of persons across the country is paved. The situation in power generation and supply is still abysmal. Low cost Mass Housing schemes are rather derisory. In recent past, we have seen a steady decline in capital expenditure of both federal and state governments whilst recurrent expenditure has been on the rise.
This simply translates into paucity of funds for building and maintenance of public infrastructure. The next big question now is, where do we turn to for solution to our current infrastructure financing challenges?
The answer lies at the door step of The Infrastructure Bank Plc. A new-look, rebranded and dedicated infrastructure bank, providing financial solutions to support key long term infrastructure projects, including transportation infrastructure, municipal common services, mass housing, solid waste management and water provision, power and renewable energy projects. At a time when other finance institutions are hesitant to provide resources for the huge but critical infrastructure investment required in Nigeria and Africa at large, The Infrastructure Bank is open to funding commercially viable projects that have significant developmental impact for both public institutions and private sector companies through the provision of specially designed and competitively priced loans which have medium to long term tenors.
This game-changing institution being managed by a retinue of personnel with time-tested financial grandeur and economic finesse do not only advance financial loans as it is evident that the challenge facing Government and a coterie of private sector institutions is not only that of finance but also that of capacity. Capacity constraints are evident across the country. The Bank funds support programmes that provide technical assistance, capacity building and other value-added services towards strengthening institutional and delivery capacities. Not also leaving out fund management, propriety equity and offering of bespoke advisory services.
Nigeria is at a unique moment that requires macroeconomic stimulus in the mode of investment in public infrastructure. This challenge, although grim, represents a refreshing prospect for the government. The economic benefits of investing in public infrastructure are countless. It provides the obviously needed stimulant in the short-term whilst contributing to higher productivity and a more competitive economy in the long run. Our infrastructural conundrum presents both crisis and opportunity. We either collectively leverage the opportunities The Infrastructure Bank Plc. offers or keep floundering in crisis.
Elvis Ogah, an Economist and International Affairs analyst writes in from Abuja. [email protected]