It is no longer news that absence of world class infrastructure is the bane of Nigeria’s economy. Infrastructure deficit is why Nigeria is import dependent, sixty after independence. It is also behind the weak competitiveness and general underdevelopment of the economy.
Several factors responsible for this parlous situation have already been identified yet, the challenge remains unsolved. Although infrastructure expenditure continues to gulp huge public resources, there is little impact on ground.
There is also an outcry from government that it’s resources alone, cannot deliver a world class infrastructure for Nigeria. New innovative ways are now being considered to mobilize finance required to bridge the infrastructure deficit. The praiseworthy initiative by FGN to establish a N15trn infrastructure fund is a revolutionary idea that can address the financing shortfall, if wisely packaged.
The FGN Infrastructure Fund should not be a Debt Fund rather, it should be packaged as an Equity Fund, denominated in Naira. This will protect it from debilitating Interest burden and forex risk. It should be an Investment Trust Fund which is closed ended. The Fund should be offered to the investing public and also open to participation by all tiers of government including their agencies.
Each tranche of the Fund after issuance in the primary market should be listed in the secondary market for trading. The Fund should be managed by the Infrastructure Bank of Nigeria while trusteeship should be by a reputable corporate Trustee, to enhance investor’s confidence. CBN should be Registrar for the Fund.
In managing the Fund, while paying maximum attention to the needs it is setup to address, profitability must remain it’s cardinal goal. For the Fund to be viable and attractive to investors, it must be able to pay dividends, after gestation period. While the secondary market offers an efficient window for liquidity, the Fund Manager must ensure safety when investing the Fund.
As initiator of this noble plan, Vice President Yemi Osinbajo should constitute and head a high powered Infrastructure Committee comprising of the Ministers of Finance, Science & Tech, Steel, Solid Minerals, Investment, Education, Health, CBN Governor, SEC DG, The NSE CEO, FMDQ CEO, Dangote Group, BUA Group, Innosin Motors, etc to mandate the Fund Manager on the order of application of the Fund.
The proposed Professor Osinbajo Infrastructure High Committee should be very strategic in prioritizing this radical intervention. Just like in education where you start from primary to secondary and finally to tertiary, economic development follows the same trajectory. The Fund should first be applied to developing critical primary infrastructure recommended as follows:
It is the starting point and cornerstone upon which a good economy is built. It serves as foundation for production. The elements of primary infrastructure catalyzed the first industrial revolution. Primary infrastructure enable economies to acquire the engineering foundation required for technological breakthrough. The order is as follows:
1) Mining industry
2) Metallurgical industry (Ferrous and Non Ferrous Metals)
3) Heavy industry (Tools, Machinery and Equipment)
4) Technical Education industry.
They are generated from primary infrastructure to drive the economy. Secondary infrastructure is an integrating device which translates labour / energy into power and ultimately to work which creates wealth. The order is as follows:
1) Energy industry (Fossil and Non Fossil)
2) Electric Power industry
3) Chemicals industry
They are produced from the primary and secondary infrastructural base. The order is as follows:
1) Rail, Roads and Ports
2) Healthcare industry
3) General education industry
4) Security industry.
Attainment of world class infrastructural base takes time. By following the development priorities stated above, the Fund can be deployed to maximize benefits. As time goes on, additional funds need to be raised to fully realize the goals. Current volume of fund targeted is just a tip of the iceberg but a journey of one thousand miles begin with one step.
If these economic infrastructures are available, productive momentum of privately sponsored light industries can continue with undiminished intensity in Nigeria. The multiplier effect will make the economy self reliant and enhance it’s capacity to generate productive employment, and create enormous wealth like China. The Fund will also help to further deepen the Nigerian Capital Market by serving as a safe investment outlet.