Economy
Nigeria Needs $3 Trillion Infrastructure Investment in the Next 30 Years – Finance Minister
By Tony Obiechina, Abuja
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed said on Monday that the Nigeria’s aspiration and infrastructure target for 30 years (2014-2043) is aimed at increasing the current infrastructure stock from 30% of the GDP to at least 70% by the year 2043.
Speaking at the One-Day Workshop on Maximizing Finance for Development (MFD) of Infrastructure in Nigeria organised by the World Bank Group in Abuja the minister stated: “It is estimated that $3 trillion infrastructure investment would be needed for the next 30 years, and provides the framework that will guide interventions, investments, as well as budgetary allocations to the sector for the period.
“Nigeria requires an estimated sum of $3 trillion to bridge its infrastructure gap over a 30-year period. This amount to roughly $100 billion per year, with a total federal budget of less than $30 billion for 2019 and the dependency of Nigeria’s income on oil revenue with unpredictable global price fluctuation, Nigeria no doubt, lacks the fiscal space to self-finance the required infrastructure investment”, she added.
Ahmed pointed out that despite all the comparative advantages in natural and human resources, Nigeria’s ability to fully actualise its economic growth potential is repressed by the country’s huge infrastructure gap.
Recalled that it was in an effort to address the issue that the Nigeria’s National Integrated Infrastructure Master Plan (NIIMP) was approved in 2014 as a policy document which was designed to provide the roadmap for building a world class infrastructure that would guarantee sustainable economic growth and development.
Giving an overview of Nigeria’s infrastructure gap, the Minister said that the Nigeria core infrastructure stock is currently estimated at 30% of the GDP which falls far short of the international benchmark of 70%.
According to her the effect of weak infrastructure, “is most striking in the energy and transportation sector. The two sectors, according to her, are key to national and economic development due to their multiplier effect across all sectors of the economy”.
In her words: “Nigeria has an average electricity consumption per inhabitant of 150kwh (kilowatt/hour) as against over 3000kwh world average (WBG). The current power generation of less than 10GW (Gigawatt) is less than half of the projected 20GW of generation capacity by 2018 which is expected to be increased to 350GW by 2043. To achieve this target, an excess of 10GW of generation capacity is expected to be added every year for the 30 years’ period of NIIMP (2014-2043)”.
Ahmed noted that the Nigerian transportation sector dominated by the road network as the pillar of economic development in the country, adding that, in terms of road network, Nigeria is ahead of the West African average, but behind the international and the Britain, Russia, India, China, and South Africa (BRICS) benchmarks.
“Looking at the individual sectors the largest investment needs are in energy and transport, which represent more than 50% of the required infrastructure investment”, she said further.
Considering the financing plan with the infrastructure gap in mind, the Minister stated that the investment is planned to be financed through both public and private sector participation.
“The private sector is expected to cater for about 48% of the investments which will account for assets that are fully owned and financed by the private sector itself. The remaining 52% of the required investment is expected to be financed from a combination of public and private sector for the first phase of the implementation.
“The private sector is expected to play a key role in providing critical infrastructure, either directly through privatization or in collaboration with the Government under public private partnership (PPP) arrangements,” she said.
According to her, there are four primary financing options namely, Governments budgets; public debt; other public sources (e.g. Sovereign Wealth Fund, Public Pension Fund); and PPPs, available for financing the investments.
In addition to already committed private sector investments, she said government is strategically considering how much, on project-by-project basis, to leverage from the primary financing options to ensure optimal risk allocation.
The minister who commended the effort of the World Bank Group for the timely intervention on infrastructure development, said the Federal Government has created an Infrastructure Project Development Facility to finance early project development activities so as to create a pipeline of bankable PPP projects, establish a dedicated cash backed fund (Government Resource Fund) outside the annul budgetary allocation process to finance the government’s contributions on infrastructure involving the private sector.
By Tony Obiechina, Abuja
The Federation Account Allocation Committee (FAAC) has shared a total sum of N722.677 billion February 2023 Federation Account Revenue to the Federal Government, States and Local Government Councils.
This was contained in a communiqué issued at the end of the Federation Account Allocation Committee (FAAC) meeting for on Wednesday and made available in a statement signed by Mr Bawa Mokwa, Director of Press & Public Relations, Office of Accountant General of the Federation (OAGF).
The N722.677 billion total distributable revenue comprised distributable statutory revenue of N366.
800 billion, distributable Value Added Tax (VAT) revenue of N224. 232 billion, Electronic Money Transfer Levy (EMTL) of N11.645 billion and N120.000 billion Augmentation from Forex Equalisation Account.In February 2023,, the total deductions for cost of collection was N27.449 billion and total deductions for transfers, savings, recoveries and refunds was N109.909 billion.
The balance in the Excess Crude Account (ECA) was $473,754.57
The communiqué confirmed that from the total distributable revenue of N722.677 billion; the Federal Government received N269.063 billion, the State Governments received N236.464 billion and the Local Government Councils received N173.936 billion. A total sum of N43.214 billion was shared to the relevant States as 13% derivation revenue.
Gross statutory revenue of N487.106 billion was received for the month of February 2023. This was lower than the sum of N653.704 billion received in the previous month by N166.598 billion.
From the N366.800 billion distributable statutory revenue, the Federal Government received N178.683 billion, the State Governments received N90.630 billion and the Local Government Councils received N69.872 billion. The sum of N27.614 billion was shared to the relevant States as 13% derivation revenue.
For the month of February 2023,, the gross revenue available from the Value Added Tax (VAT) was N240.799 billion This was lower than the N250.009 billion available in the month of January 2023 by N9.210 billion.
The Federal Government received N33.635 billion, the State Governments received N112.116 billion and the Local Government Councils received N78.481 billion from the N224.232 billion distributable Value Added Tax (VAT) revenue.
The N11.645 billion Electronic Money Transfer Levy (EMTL) was distributed as follows: the Federal Government received N1.747 billion, the State Governments received N5.822 billion, and the Local Government Councils received N4.076 billion.
From the N120.000 billion Augmentation, the Federal Government received N54.998 billion, the State Governments received N27.896 billion, the Local Government Councils received N21.506 billion and a total sum of N15.600 billion was shared to the relevant Sates as 13% mineral revenue.
According to the communiqué, in the month of February 2023, Petroleum Profit Tax (PPT), Companies Income Tax (CIT), Oil and Gas Royalties, Import and Excise Duties all decreased significantly while Value Added Tax (VAT) and Electronic Money Transfer Levy (EMTL) decreased marginally.
By Tony Obiechina, Abuja
The African Export-Import Bank (Afreximbank) has announced the enhancement of the financing facility provided to Fidelity Bank plc, Nigeria under the Afreximbank Trade Facilitation Programme (AFTRAF).
The decision to increase Afreximbank’s support is consistent with the economic and commercial success of the financing facility, the first $125 million of which has been fully utilised by Fidelity Bank.
The expansion to $180 million was also bolstered by the continued strong financial performance of Fidelity Bank, Nigeria’s largest Tier 2 bank.
The augmented financing facility will allow Fidelity Bank to scale up and accelerate its activities and programmes in trade and related activities.
Commenting on the development, Prof Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, commented said Afreximbank is keen to support a leading African bank that supports African businesses and entrepreneurs.
He said, “Fidelity Bank has proven its ability to make smart use of this type of financing, with consequent benefits for the Nigerian economy. Afreximbank is keen to support a leading African bank that supports African businesses and entrepreneurs.”
Afreximbank deploys innovative structures to deliver financing solutions that support the transformation of the structure of Africa’s trade, accelerating industrialization and intra-regional trade, thereby boosting economic expansion in Africa.
A staunch supporter of the African Continental Free Trade Agreement (AfCFTA), Afreximbank has launched a Pan-African Payment and Settlement System (PAPSS) that was adopted by the African Union (AU) as the payment and settlement platform to underpin the implementation of the AfCFTA.
The bank is working with the AU and the AfCFTA Secretariat to develop an Adjustment Facility to support countries in effectively participating in the AfCFTA.
By Tony Obiechina, Abuja
The currency in circulation in the country dropped by a 235.03 per cent to N982.09bn at the end of February from N3.29tn recorded at the end of October 2022.
According to figures obtained from the CBN, this followed the naira redesign policy of the Central Bank of Nigeria (CBN) which revealed that N2.
3tn was mopped up from circulation during the period under review.According to the CBN, the currency in circulation moved from N3.
16tn to N3.29tn and N1.38tn in November 2022, December 2022 and January 2023 respectively.The Governor of the CBN, Godwin Emefiele, had in October 2022, announced plans to redesign the old N200, N500 and N1,000 notes.
Emefiele also announced deadlines for Nigerians to swap their old notes with the new notes.
The governor decried the challenges associated with currency management, including the hoarding of banknotes by members of the public, with statistics showing that over 80 per cent of currency-in-circulation was outside the vaults of commercial banks.
Other challenges, according to him, included a shortage of clean and fit banknotes with an attendant negative perception of the CBN and increased risk to financial stability and increasing ease and risk of counterfeiting evidenced by several security reports.
At the expiration of the deadline for the old notes, due to the scarcity of the new naira notes, President, Muhammadu Buhari had approved the continued use of the old N200 as legal tender till April 10.
However, the Supreme Court on Friday, 3 March 2023, ruled that the old Naira notes should remain legal tender till 31 December 2023, thereby setting aside the deadline of the CBN.
However, in its new ruling, the Supreme Court said that all the old notes would remain legal tender until December 31, 2023, while nullifying the Naira redesign policy.
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