The CBN governor says infrastructure development is the surest way to diversify the income base of any country.
The Governor of the Central Bank of Nigeria, CBN, Lamido Sanusi, has said the infrastructure deficit challenge facing the country can be blamed on absence of long-term low-interest financing for projects.
The governor said this on Wednesday when members of the board of the Infrastructure Concession Regulatory Commission, ICRC, visited him in Abuja. He said countries financing infrastructure usually provided such facility.
“People need to look at how some countries did it,” Mr. Sanusi said. “In China, they set up state-owned banks that lend money at seven to nine per cent for 10 to15 years for the building of infrastructure.
Sometimes, the loans go bad and when they build up the bad loans, the Chinese government will issue a bond, recapitalize the banks and they will continue lending.”
He said the funds used in building the infrastructure would afterwards be recovered from the industry and income taxes, as infrastructure development is the surest way to diversify the income base of any country.
Mr. Sanusi said the apex bank had pushed about N850 billion in long-term low-interest fund into the economy under various intervention scheme in the power, aviation and agriculture sectors.
Some of these schemes include the N300billion Power and Airline Intervention Fund, PAIF; the N200billion intervention fund for re-financing and restructuring of banks’ loans to the manufacturing sector, RRF, and the N200billion Commercial Agriculture Credit Scheme.
Mr. Sanusi admitted that the N220 billion Micro, Small and Medium Enterprises Fund was yet to be disbursed to entrepreneurs and assured it will soon be disbursed.
He advised the Federal Government to ensure that funds in the capital market and the pension funds were used to fund infrastructure development in the country.
“When I leave office, one of my real objectives is to set up a policy think-tank for Africa and, for me, this is the kind of issues I like to engage in to help in facilitating the continent’s development,” he said.
The bank chief said the biggest deficit facing African countries was a policy deficit and not money deficit. He said 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.
The Chairman of ICRC board, Ken Nnamani, had commended the apex bank 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.
Mr. Nnamani said the ICRC was currently involved in pre-contract regulatory activities with respect to the PPP projects concerning the CBN, Nigerian Post and Telecommunications, NIPOST, and Federal Ministry of Communications Technology.
Urging the CBN to accelerate this project, Mr. Nnamani said it would play a key role in reviving the Post Office as an institution, by providing viable financial services to low income Nigerians, especially in the rural areas.
He also asked the CBN to establish a PPP intervention fund and develop a long-term infrastructure financing and funding framework “to provide long tenure funds to support PPP projects”, saying that a dedicated PPP infrastructure intervention fund would accelerate critical infrastructure development in Nigeria by making low interest long-term capital available to PPP project sponsors.
The proposed intervention fund, he said, would also provide support to ministries, departments and agencies, MDAs, and the ICRC for various PPP projects and development efforts.
Mr. Nnamani said that he was optimistic that the Commission would partner with the CBN to develop appropriate mechanism to unlock capital market and pension funds for infrastructure financing in a sustainable manner.