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President Muhammadu Buhari has approved the setting up of a new company to address Nigeria's infrastructure challenges. Called Infra-Co, the company will be established with a seed capital of N1 trillion, according to a statement released on Friday by Laolu Akande, Senior Special Assistant on Media and Publicity to Vice President Yemi Osinbajo.

Infra-Co will be a public private partnership (PPP) infrastructure firm and one of the premier infrastructure finance entities in Africa. Developed with concept designs by the National Economic Council (NEC) and the Central Bank of Nigeria (CBN), the company will be dedicated to Nigeria’s infrastructure development.   

“Infra-Co will finance public asset development, rehabilitation and reconstruction as well as invest in cutting-edge infrastructure projects for roads, rail, power and other key sectors,” the statement from the Presidency said.

The trillion-naira seed capital is to be provided by the CBN, the Nigeria Sovereign Investment Authority (NSIA) and the Africa Finance Corporation (AFC). Over time, the company will leverage local and international funds to grow its assets and capital to N15 trillion.

The International Monetary Fund (IMF) estimates Nigeria's infrastructure stock at 25 per cent of GDP. This is below the global average of 70 per cent. In 2019, Minister of Finance, Budget and National Planning, Zainab Ahmed, said Nigeria will require about $100 billion annually over the next 30 years to effectively tackle the country’s vast infrastructure deficit.

The Buhari administration has been aggressively using deficit financing for infrastructure development over the last five years. The government also established the Presidential Infrastructure Development Fund (PIDF), a programme designed to complete strategic road and power projects across the country such as 2nd Niger Bridge, Lagos-Ibadan Expressway, Abuja-Zaria-Kaduna-Kano Road and Mambilla Hydropower Project. The NSIA is the project manager and implementing entity for the PIDF.

According to the government, the board of Infra-Co will be chaired by the Governor of the CBN, together with the Managing Director of NSIA and the President and CEO of AFC, a multilateral finance institution. The board will have representatives of the Nigerian Governors Forum and the Ministry of Finance, Budget and National Planning. Three independent directors from the private sector will also be on the board.

Osinbajo was also announced as the chair of a Steering Committee tasked with setting up the company.