FMDQ chief, others seek alternative funding for capital projects
Nigeria has been urged to seek alternative sources of financing to support infrastructure development, given the reduction in the level of public funds available due to budgetary pressures.
FMDQ Group Chief Executive Officer, Bola Onadele who said this at a webinar, noted that the debt and capital markets provided a key avenue through which infrastructure growth could be fostered to promote economic development.
The FMDQ CEO said that increased public debt to GDP and the inability of the public sector to deliver a more efficient investment spending, with the presence of competing priorities, called for an alternative sources of financing.
According to him, infrastructure development was critical for economic growth, reduced poverty, job creation as well as improving the wellbeing of the citizenry.
“Infrastructure development is a key driver for progress across the continent and a critical enabler for productivity and sustainable economic growth.
“Traditionally, infrastructure investments have been financed with public funds by governments; they being the key players given the inherent public good nature of infrastructure,” he said.
Onadele said it was necessary for the private sector to play a role in ensuring that the necessary capital was channeled into this extremely vital area, to drive the much-needed growth.
He noted that private sector financing was critical and the capital market needed to be harnessed to raise alternate finance to be deployed to diverse projects through the issuance of long term securities.
Onadele said access to financing ranked as a top challenge in infrastructure development, according to a PricewaterhouseCoopers survey.
He said that the existence of an enabling political and regulatory environment was also important in attracting both local and foreign investors into the infrastructure development sphere.
According to him, the McKinsey Global Institute estimates that $3.3 trillion must be spent annually through 2030 to address Africa’s huge Infrastructure gap.
He said that according to the IFC, bridging the huge infrastructure gap in emerging markets economies, estimated at $1.3 trillion per year, is vital to attaining the United Nations Sustainable Development Goals.
Bolaji Balogun, Chief Executive Officer, Chapel Hill Denham & Chair, Steering Committee, FMDQ Debt Capital Markets Development Project, said government budget could not be enough for infrastructure development.
Balogun said $35/$40 billion was needed annually to address infrastructure problem, noting that, government budget was completely inadequate.
“We are only scraping the surface: only if investment in infrastructure grows by 15 to 18 per cent a year can we reach eight per cent economic growth.
“Unlocking institutional capital domestically, regionally and globally is the only way to deliver infrastructure for Africa,” he said.