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Infrastructure: ‘FG needs unusual technique to raise N3trn’



Infrastructure: ‘FG needs unusual technique to raise N3trn’

Worried by huge infrastructure gaps in the country coupled with low financial resources to match the development, the Federal Government has been urged to adopt a nontraditional model to tackle the challenge.

Chartered Accountant and current Chairman of the Lagos State Economic Advisory Committee, Mr. Bode Agusto, made this call during the International Real Estate Federation (FIABCI) Nigeria’s New Year Dinner in Lagos. Specifically, he said a non-traditional model would involve the government partnering with International Development Institutions (IDAs), local businesses and foreign businesses for infrastructure investment.

With this model that encourages public/partnership, he said it would allow infrastructure projects with strong economics such as the national grid and rail transportation to be adequately executed. Agusto said the non-traditional model would help to build infrastructure that would trigger business growth and development of the country. Currently, Nigeria has $3 trillion infrastructure deficit and N1.7 trillion is needed to deliver 206 federal roads covering over 6,000 kilometres with contract valued at over N2 trillion.

Agusto, who doubled as guest speaker at the forum, warned that the traditional way by which government was the sole provider of funds for infrastructure investment, while projects were being executed through the ministries, departments and agencies (MDA) can no longer work due to scarcity of funds.

Besides, he stated that under traditional way in Nigeria, infrastructure projects became politicised as budgets were approved late, adding that it resulted in proliferation of projects and that scarce funds were spread thinly amongst the numerous projects, while many projects were rarely completed.

He listed the slow-pace of the Lagos- Ibadan Expressway’s construction as a major example. Justifying a paradigm shift in infrastructure finance, Agusto said the non-traditional model would allow partners to be committed to funding of projects since they want their money back plus some return.

“Therefore, infrastructure projects that lend themselves towards public/private partnerships are those with strong economics like the national grid and rail transportation,” he said. On how to go about this model, the renowned chartered accountant said that government could prepare the list of key projects it would like to undertake and create an infrastructure fund that it will employ to partner with the private sector for the development of projects with strong economics and huge social impact.

He said: “Let us use the Federal Government as an example. Government makes a list of the key projects that she would like to undertake and divide them into two categories: Those with strong economic and social impact such as the national grid, railway infrastructure, railway rolling stock and 2nd Niger Bridge.

“Those with weak economics but strong social impact e.g. water for rural communities and rural electrification, among others,” he said. Agusto said government can pay N500 billion annually (about half of what it currently spends) into this Fund and also set up a strong governance process for managing the fund.

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