The Governor of the Central Bank of Nigeria (CBN), Lamido Sanusi, explained the causes of the infrastructure deficit in Nigeria and suggested they way how to overcome the problem.
Sanusi said this when members of the board of the Infrastructure Concession Regulatory Commission (ICRC) visited him on Wednesday in Abuja.
According to the CBN chief, the infrastructure deficit can be blamed on absence of long-term low-interest financing for projects.
He said it's a common practice for countries to provide such facility to finance infrastructure.
Sanusi said the funds used in building the infrastructure would be recovered from the industry and income taxes as infrastructure development is the surest way to diversify the income base of any country.
The Governor also said the Central Bank had already pushed about N850 billion in long-term low-interest fund into the economy under various intervention scheme in the power, aviation and agriculture sectors.
These schemes include the N300 billion Power and Airline Intervention Fund (PAIF), N200 billion intervention fund for re-financing and restructuring of banks’ loans to the manufacturing sector (RRF), and N200 billion Commercial Agriculture Credit Scheme (CACS). Sanusi noted that the N220 billion Micro, Small and Medium Enterprises Fund was yet to be disbursed to entrepreneurs. He assured it will soon be disbursed.
Central Bank boss advised the Federal Government to ensure that funds in the capital market and the pension funds were used to fund infrastructure development.
He also said that the biggest deficit facing African countries was not a money deficit but a policy deficit.
According to Sanusi, something must definitely be wrong for Nigeria to have more than $25 billion in pension funds, yet not $1 million of it could be put into infrastructure development.
He disclosed, the upon retirement he is going to set up a policy think-tank that will assist African countries in facilitating the their development.
The Chairman of ICRC board, Ken Nnamani, had commended the CBN for its support in developing a draft infrastructure finance policy for the country, saying the visit was to work out avenues to deepen CBN’s Public Private Partnership (PPP) initiative.
Experts have identified infrastructure deficit as a major constraint to Nigeria’s development as the existing infrastructure base in the country is grossly inadequate to meet the demands of development.
To address this problem, the Ministry of National Planning Commission had in August 2013 announced a 30-year plan known as National Integrated Infrastructure Master Plan (NIIMP). It focuses on core infrastructure, including energy (power and oil & gas), transport (roads, rail, ports and airports), housing, water and ICT.
The plan is to raise the nation’s stock of infrastructure from the current 35 per cent of Gross Domestic Product (GDP) to 70 per cent of GDP in 2043. The implementation of the plan would cost $2.9 billion, 48 per cent of which would come from the private sector.