The private sector is finding it difficult to borrow funds and invest in infrastructure development due to lack of institutional capacity to protect its investments, the Nigerian Sovereign Investment Authority, NSIA, has said.
A statement by the Finance Ministry highlighting the achievements of the Minister of Finance, Kemi Adeosun, in the last one year, said operations of the NSIA were geared towards helping resolve this challenge and ensure that the private sector was empowered to fill the infrastructural gap.
“NSIA has the financial muscle, the institutional framework, the governance structure, and capacity to function as a strategic institution that can engage constructively with the global investing community and unlock those funds into the infrastructure sector,” the statement also said.
With a capital base of $1.5 billion, the agency says it occupies a strong position to work with reputable global partners like the World Bank, the International Monetary Fund, IMF, and the African Development Bank, AfDB, to carry out infrastructure investments.
Apart from its investment finance models being transparent and structured in accordance with world class standards, NSIA said its activities were largely private sector driven and managed by a competent team of Nigerian professionals, who have made their marks in global investing and business community.
Since its inception, the agency had initiated a series of activities to boost the growth of the Nigerian economy, including building strategic partnerships with reputable global investment companies, to attract inflow of global finance for infrastructure development.
In 2014, NSIA entered a partnership agreement with GuarantCo, a leading international credit guarantee firm sponsored by the governments of Australia, United Kingdom, Sweden, Switzerland and Netherlands, to explore ways to access capital for investments in infrastructure.
In early 2017, the partnership resulted in the establishment of the Infrastructure Credit Enhancement Company, InfraCredit, to help address and overcome existing constraints in the supply of local financing to infrastructure projects and development of the local financial markets.
InfraCredit is expected to provide credit guarantees for infrastructure bonds issued by corporate bodies and state governments to finance viable development projects in the country, Managing Director of NSIA, Uche Orji, said.
“The real revolution that the credit enhancement vehicle brings to the table is its institutional capacity to attract and unlock the massive unused funds from international pension and insurance administrations without putting future savings at risk,” Mr. Orji explained.
With the pension fund of over N6 trillion in asset, Mr. Orji noted that InfraCredit, which would start operations in the second quarter of next year with about $200 million, would address a fundamental problem, by providing credit guarantees about safety concerns of pension fund administrators.
Apart from infrastructure development, the investment agency created a significant impact in the agricultural sector in 2017, particularly in the area of fertiliser production and supply in Nigeria.
After decades of scarcity, high prices, non-availability, subsidy, corruption and other related sharp practices, Mr. Orji said farmers began to experience a turnaround, as over a dozen fertiliser blending plants were revived during the year.
Besides, he said local fertiliser production capacity grew significantly during the year, resulting in the elimination of importation of raw materials that could be produced locally.
“The fertiliser supply and distribution systems are working efficiently and enhancing access to fertiliser by ordinary farmers. To cap it, for the first time in Nigeria, fertiliser is being sold at record low prices and the government is no longer carrying the burden of subsidising its supply. This is huge,” Mr. Orji said.
He said an assessment report on the impact of reviving the 11 fertiliser blending plants across the country showed that the production and sale of eight million bags of fertilizer at N5,500, against the market price of N8,000, created an estimated 50,000 direct jobs, including almost double indirect jobs associated with the industry.