img Nigerialog.com - Nigeria's Premier Online Forum - Nigeria Needs $3tn to Tackle Infrastructure Deficit, Says Moody’s
Welcome, Guest.
Did you miss your activation email?

Date: November 30, 2020, 09:19:35 PM

Contact
imgimgimg

Nigeria Needs $3tn to Tackle Infrastructure Deficit, Says Moody’s: Politics : Nigerialog.com - Nigeria's Premier Online Forum

76 views

Nigeria Needs $3tn to Tackle Infrastructure Deficit, Says Moody’s

By: dayan (M) |Time : November 20, 2020, 05:20:26 AM
Obinna Chima

One of the leading global rating agencies, Moody’s Investors Service, has stated that the infrastructure in Nigeria is behind other emerging market peers, with about $3 trillion needed over 30 years to close the gap.

Given the budget constraints facing the country, the rating agency noted that addressing this shortfall will require financing from the private sector, multilateral development institutions and other non-state investors.
The company, in its first report on the Nigerian infrastructure market obtained yesterday, noted that Nigeria faces many budgetary and financing challenges.

It stated that weak institutions and governance frameworks along with a low tax base are hindering infrastructure investment, while financially strained utilities are unable to invest in improvements.
It said: “Nigeria has a significant infrastructure deficit and faces additional pressures from a rapidly growing population. Nigeria’s current infrastructure stock lags behind emerging market peers, and it is a constraint on business activity and growth.

“There are major budgetary and financing challenges to developing infrastructure in Nigeria. Government funding capacity and customer affordability are both low and have been further weakened by the Coronavirus pandemic and the low oil price environment. The country’s weak institutions and governance framework, together with a low tax base, also hinder infrastructure investment.

“Infrastructure development has been concentrated on economic infrastructure and this focus will continue. Investment has primarily been within economic infrastructure such as power, railways, roads, ports and pipelines; rather than social infrastructure such as hospitals and schools.”

According to it, Nigeria requires investment to address its electricity shortages, noting that increased private and multilateral sector involvement is required to achieve this.
It added that Nigeria’s power sector could benefit from renewable energy like solar and wind with financing also possible from green bonds.

Financial guarantors, multilateral development banks and local institutional investors will be important in helping finance infrastructure development, it said.
“In its Economic Recovery and Growth Plan 2017-2020 (ERGP), the Nigerian government estimated that the country’s infrastructure stock represented only 35 per cent of GDP, compared with an average of 70 per cent for peer emerging market countries.

“The National Integrated Infrastructure Master Plan (NIIMP), which set out priorities for 30 years to 2043, estimated $3 trillion investment is required over 30 years to close the infrastructure gap, which equates to an annual spending rate of above seven per cent of GDP.
“In its 2020-2024 Nigeria Strategy Paper, the African Development Bank (AfDB) highlights infrastructure development as one of its key priority areas for support, noting that the country’s infrastructure deficit acts as a significant supply-side constraint,” it added.

The report, however, showed that the country’s share of the population with access to electricity increased from 40 per cent in 2015 to 54 per cent in 2020.
While Nigeria has 13,500MW total installed generation capacity, only 7,500MW is functional, it added.
It said: “The generation capacity is constrained by the unavailability of gas feedstock (despite Nigeria’s large gas resources) and inadequate transmission capacity. Deficient on-grid supply leads to consumers using off-grid alternatives, which account for 52 per cent of electricity consumption.

“Citizens who have access to the grid electricity face regular power cuts. Of the around 90 million Nigerians reported to have no access to electricity, 17 million live in urban areas, while 73 million live in rural communities, which means that a majority of the non-electrified population live in off-grid areas where the provision of grid supply is not economic because of the high cost of constructing transmission infrastructure.

“Nigeria ranks near the bottom of a number of international surveys assessing institutional strength and scores poorly compared with peers on most Worldwide Governance Indicators, including government effectiveness, control of corruption and rule of law.
“The government has a low tax base relative to Sub-Saharan Africa (SSA) peers. Corruption is of particular concern to investors in large, capital intensive infrastructure projects that require years of planning, land negotiations and permitting, and regulatory approvals.”

Commenting on the findings of the report, Vice President, Senior Analyst at Moody’s Investors Service, Kunal Govindia, said: “Nigeria currently has a significant infrastructure deficit, and faces additional pressures from a rapidly growing population.
“Its low government funding capacity and customer affordability has been weakened further by the Coronavirus pandemic and low oil prices.”

Re: Nigeria Needs $3tn to Tackle Infrastructure Deficit, Says Moody’s

By: dayan (M) |Time : November 20, 2020, 05:28:50 AM
Quote
“The National Integrated Infrastructure Master Plan (NIIMP), which set out priorities for 30 years to 2043, estimated $3 trillion investment is required over 30 years to close the infrastructure gap, which equates to an annual spending rate of above seven per cent of GDP.

What I can say is that it would be near impossible for current structure of Nigeria to allocate above 7% of GDP to infrastructure development for 30 years because a section of Nigeria depends on government alone for even basic employment.

Northern Nigeria sees government as the business where everybody goes to get a job.

For Nigeria to grow sustainably, that must end and people there must stop depending on government where recurrent expenditures sustain them. They must get their mouths out of government udders.

I personally believe that a restructured Nigeria does not need 30 years to develop these infrastructure; in fact I believe it can be done in about half the time! But not with this structure. In fact this structure will NOT deliver such infrastructure in 100 years!   

0 Members and 1 Guest are viewing this topic. Reply

web site traffic statistics