Given the highly regarded N15 trillion infrastructure fund designed by the Central Bank of Nigeria (CBN), the fund is needed to support business owners such as small and medium enterprises (SMEs), micro , small and medium-sized enterprises (MSMEs) as well as supporting infrastructure investments that will have a multiplier effect on growth in critical sectors. ADEOLA TUKURU reports.
The CBN N15 billion InfraCo Fund comes at a time when it is most needed to help business owners, especially SMEs and MSMEs, boost economic growth, as they are hampered by limited access to finance, infrastructure inadequate and low digital penetration.
It will also create hundreds of thousands of new jobs and preserve existing jobs, thus bolstering the much-applauded ambition of the federal government led by Muhammadu Buhari to create 100 million jobs and significantly reduce poverty in the country.
According to the Nigeria Bureau Statistics (NBS), small and medium-sized enterprises (SMEs) contribute around 48th of the national GDP over the past five years with a total number of around 17.4 million, they account for around 50 percent of jobs industries and nearly 90 percent of manufacturing sectors, in terms of number of firms.
President Muhammadu Buhari revealed in January this year in a speech delivered virtually on his behalf by Vice President Yemi Osinbajo at the opening session of the 26th Nigerian Economic Summit Group (NESG) conference in Abuja that the government would launch an infrastructure fund of N15 trillion.
He assured Nigerians that they were actively working with the CBN, the Nigerian Sovereign Wealth Investment Authority and state governments under the auspices of the National Economic Council (NEC) to design and set up a N15 trillion InfraCo fund. , which will be managed independently.
Last month, CBN Governor Godwin Emefiele confirmed that the umbrella bank, the African Finance Corporation and the Nigerian Sovereign Investment Authority would launch an InfraCorp Plc, providing a N15 billion fund to fill persistent deficits in the infrastructure.
Multiplier effect on growth
Emefiele had said the N15 trillion fund, under the name InfraCorp Plc and due to be launched in October, would use “mostly private capital to support infrastructure investments that will have a multiplier effect on growth in critical sectors.
With inflation hovering around 17.33% and unemployment above 33.3%, while increasing debt poses serious dangers, but with improved infrastructure, the country can improve its productivity and thus improve its quality of life. Development could in turn combat the growing poverty in the country.
Opinion of business owners on the CBN initiative
While sampling the opinions of business owners, one Mr. George Agaye, a spare parts trader at Dei Dei Building Materials, Abuja praised CBN initiatives and added that the cost of borrowing for SMEs and others in the productive sector has been very high because banks do not have sufficient funds to give to investors. “It has been difficult for Nigerian SMEs to access loanable funds from the CBN.”
He said that by making the CBN initiative more effective, the CBN must create more attractive loans for SMEs and the productive sector in order to contribute enormously to the gross domestic product (GDP) of the country.
Another business owner, Ms Asabe Onuwa, said that given her roles and interventions as an activist and stimulator of the Nigerian economy for sustainable growth, the CBN has gained a good reputation for himself and his current leadership.
She said the CBN should maintain these roles and the pace of the introduction of new initiatives.
Need for appropriate sustainable plans
Although stakeholders stressed the need to invest heavily in infrastructure, noting that the efforts but the CBN remained laudable, they insisted that there was a need for appropriate and sustainable plans that would lead to the projected goals. .
Professor of economics at Babcock University and former president of the Chartered Institute of Bankers of Nigeria (CIBN), Segun Ajibola noted that several hundred thousand networks of roads, railways, energy and electricity, water and others remained critical but unfortunately insufficient or dilapidated. .
Deficits constrain the country’s economy despite population growth, urbanization and technological progress, he said, adding that the need to provide such essential infrastructure remains inevitable but daunting.
“Until now, some confidence has been placed in other sovereigns such as China, international financial institutions such as the World Bank, ADB, etc. But there is a limit to what Nigeria can attract. of these countries and institutions because of the not too friendly conditionalities generally imposed on developing countries like Nigeria.
Clearly define the framework
“Looking inward in the way the CBN suggests can be helpful. But then the framework must be right. I will recommend a private partnership via a collaboration agreement between local and foreign interests deemed competent to provide such infrastructure, ”noted Ajibola.
He noted that the PPP would improve the quality of delivery, performance and accountability, noting that such interventions should be aligned with relatively generous terms and a business model.
Ajibola urged the umbrella bank to introduce a performance monitoring framework, which must be efficient and effective, adding that there must be a change in the vision of intervention funds as free public funds, adding that such mentality must be fought headlong if the infrastructure fund will achieve the desired objectives.
Former Nigerian Chamber of Commerce Chairman and Chairman of the Tricontinental Group, Olabintan Famutimi, noted that while infrastructure deficits in the country remain a concern and require intervention such as CBN funding, the country must act wisely.
Famutimi feared channeling funds to viable projects with economic benefits instead of politicizing economic and business decisions.
“We have a huge infrastructure deficit. We need infrastructure, but it’s more about the infrastructure the government is working on, the source of funding and the terms of the fund and the overall effect on the economy, ”he said. he declares.
Famutimi has insisted that fundraising to finance infrastructure is not enough, but critical examination of the projects’ economic prospects and multiplier effects on the nation has remained sacrosanct.
An expert at PWC, Habeeb Jaiyeola noted that while infrastructure funds are used around the world for the development of critical infrastructure, which ensures consistent returns on investment for investors, a critical component of the funds’ success remains. adequate planning and strategic contracts.
“It is expected that the N15trn fund will be channeled to critical infrastructure in the country, which will open up sectors and markets, as infrastructure challenges have been one of the main factors hampering the growth of some critical sectors in the country. Nigeria, ”Jaiyeola said.
He noted that with several infrastructure initiatives already conceptualized in various sectors, in particular the gas infrastructure fund integrated into the newly signed PIA, the host community development fund also within the PIA, the N15trn infrastructure should be administered to complement and align with the plans. and projects.
Some of the CBN’s initiatives include the SME Credit Guarantee Scheme (SMECGS); Micro, Small and Medium Enterprise Development Fund (MSMEDF); and Youth Entrepreneurship Development Program (YEDP).
Others are the Agribusiness / Small and Medium Enterprise Investment Program (AGSMEIS); Creative Industries Funding Initiative (CIFI); Targeted Credit Facility (TCF) and Nigeria Youth Investment Fund (NYIF).