The Central Bank of Nigeria (CBN) said it has given out N424.14 billion to help develop electricity and gas infrastructure in the country.
The apex bank maintained that the federal government needs about $100 billion annually to address the nation’s infrastructure deficit.
Delivering the keynote address at the Finance Correspondents Association of Nigeria (FICAN) 2021 Annual Conference and 30th Anniversary Celebration, themed “Financing Infrastructure & SMEs for inclusive growth in the post-COVID-19 economy” at the weekend, the CBN governor, Godwin Emefiele, stressed the need for funding for infrastructure development.
According to him, in Nigeria, the current level of infrastructure deficit is a major constraint to economic development and attainment of growth average rate of at least 5 to 7 per cent required to boost productivity and sustainable growth for businesses.
Quoting the World Development Indicators 2019 report, he said 56.20 per cent of Nigerians have access to electricity, with electric power consumption at 144.52 kWh per capita as of 2018, and infrastructure deficit in Nigeria estimated to be about 1.2 per cent of GDP.
To bridge the gap, he said, the CBN in line with its developmental mandate to stimulate finance to infrastructure development in Nigeria, had developed and introduced low-interest and long-term finance interventions in tandem with the gestation periods of infrastructure projects.
“The design of the interventions was hinged on the need to develop enabling infrastructure in critical sectors to drive economic growth and development. To support the resilience of the real sector, the bank’s financing interventions include the Nigeria Electricity Market Stabilisation Facility (NEMSF), which has disbursed N336.88 billion to support the development of enabling infrastructure in the energy sector by financing massive capital expenditure (Capex) in the sector.
“The intervention has also contributed to the increased electricity generation to 5,195 MW through the additional 1,403.3 MW of electricity generated, of which 944.3 MW new capacity was added from financed power projects.
“To provide liquidity support to electricity distribution companies (DisCos) and improve revenue collection efficiency, the CBN released N41.06 billion for the procurement and installation of 657,562 electricity meters across the country, under the National Mass Metering Programme (NMMP).
“Equally, N7 billion has been released under the Solar Connection Facility (SCF) to facilitate the procurement and installation of 100,000 solar home systems; and N39.20 billion to support the development of enabling infrastructure to optimize the domestic gas resources for economic development under the bank’s Intervention Facility for the National Gas Expansion Programme (IFNGEP),” Emefiele said.
He, however, noted that despite efforts by the apex bank to address infrastructural challenges, “these are just a drop in the ocean, as the US$100 billion annual investment required for infrastructure development cannot be solely financed by the CBN.
“Bearing the importance of quality infrastructure to economic growth, the fiscal authorities and private sector have roles in the ecosystem, with innovative financing options explored. The Sukuk bond market has provided a substitute for the traditional interest-based financing options and has been used to finance critical infrastructural project across the country.
“Public and Private Partnership (PPP) also provides an alternative to finance infrastructure projects, thereby easing budgetary constraints and improve operational efficiency by leveraging private sector’s expertise and robust financing options. This PPP option is yet to be fully explored in Nigeria, despite its popularity in other emerging economies, particularly Brazil and India,” he added.