Initiatives for private financing for Nigerian infrastructure projects

21 Dec 2021, 12:00 am
Detail Commercial Solicitors
Initiatives for private financing for Nigerian infrastructure projects

Feature Highlight

Nigeria has a huge infrastructural deficit and requires up to $3 trillion over the next 30 years to bridge this gap.

Transportation infrastructures


The backbone of any national economy is its stock of infrastructure. Good transport networks, modern ports, high-capacity telecommunication networks, and regular power supply, all contribute significantly to the well-being of the population, the productivity of the workforce, and facilitate broader access to education and health services.

Nigeria has a huge infrastructural deficit and requires up to $3 trillion over the next 30 years to bridge this gap. The Federal Government has estimated that it would require about $2.3 trillion cumulatively or $150 billion annually to upgrade the poor state of Nigeria’s infrastructure, according to BusinessDay. Consideration must be given to the debt profile of Nigeria in determining whether the government can on its own provide the required funding.

The Debt Management Office (DMO) has indicated that as of 30 June 2021, Nigeria has a total public debt portfolio of about N35.46 trillion, consisting of its total external and domestic debt. Evidently, it will be an unsustainable approach for the government to be the sole financer of infrastructure projects. Consequently, recourse must be made to private sector financing of infrastructure, which amongst other sources include the N12.34 trillion pension assets under management.

In this write-up, we will first give a brief overview of the key regulators that have a role to play in private sector participation in infrastructure financing. We will then consider more recent strategies aimed at increasing private sector participation and conclude by making recommendations on improving the appetite of private investors in infrastructure financing.


The mandates of the following regulatory agencies cover private sector participation in infrastructure financing:

1.    Securities and Exchange Commission (SEC)

SEC is tasked with the role of overseeing the capital market and the raising of funds from the public. In the exercise of its powers, SEC has released rules and regulations such as the SEC Rules on Infrastructure Funds (2014) and the Rules on Fixed Income Securities which forms part of the consolidated body of SEC Rules.

The capital market has proven to be an important source of financing for infrastructure projects in many jurisdictions. In 2020, about $16.7 billion was raised from the capital market via bonds towards infrastructure projects in the United States, while the United Arab Emirates raised $4 billion, Israel raised $2.3 billion, and the Netherlands raised $1.8 billion, according to Crédit Agricole Corporate and Investment Bank (Global Investment Banking).

2.    National Pension Commission (PENCOM)

PENCOM was established under the Pension Reform Act (2004) as the body to regulate, supervise and ensure the effective administration of pension matters in Nigeria. This includes the issuance of regulations to govern the investment of pension assets. Currently, Pension Fund Administrators are permitted to invest in bonds issued by eligible, listed and unlisted corporate entities, which may be used for infrastructure projects.  Infrastructure funds registered with SEC and commercial papers issued by eligible corporate entities are amongst other allowable instruments under the Regulation on Investment of Pension Fund Assets (2019).

3.    Central Bank of Nigeria (CBN)

While the CBN is not a direct regulator in the infrastructure space, it has in exercising its development financing mandate spearheaded a number of major initiatives in the infrastructure space such as the Nigerian Electricity Market Stabilization Facility in the power sector.

4.    Infrastructure Concession Regulatory Commission (ICRC)

The ICRC was established to regulate Public Private Partnership (PPP) projects involving the Federal Government, which are aimed at addressing Nigeria’s physical infrastructure deficit. The ICRC is empowered to, amongst other things, take custody of every concession agreement made under the enabling Act and monitor compliance with the terms and conditions of such agreement.

The ICRC is mandated to manage the complex arrangements that the PPP process entails, as well as build capacity within government ministries, departments and agencies to handle such arrangements themselves, subsequently. The ICRC is also expected to monitor the implementation of such arrangements according to best practices, ensuring that the desired service standards are attained and maintained, value for money is assured and that the private sector operators are in a position to recoup their investment in a fair and equitable manner.

5.    Bureau of Public Procurement (BPE)

The BPE was established as the regulatory authority responsible for the monitoring and oversight of public procurement, harmonization of existing government policies and practices, setting standards and developing the legal framework and professional capacity for public procurement in Nigeria. The BPE is to ensure the application of fair, competitive, transparent, value-for-money standards and practices for the procurement and disposal of public assets, and the attainment of transparency, competitiveness, cost effectiveness and professionalism in the public sector procurement system.


In order to increase private sector participation in infrastructure financing, the following are some initiatives which are currently being used in Nigeria:

1.    Infrastructure Corporation of Nigeria Limited (InfraCorp)

InfraCorp has been formed by the CBN, the Africa Finance Corporation (AFC) and the Nigerian Sovereign Investment Authority (NSIA) for the purpose of catalysing and accelerating investment into Nigeria’s infrastructure sector. According to the CBN, InfraCorp is a dedicated privately managed infrastructure and industrial vehicle that will harness opportunities for Nigeria’s infrastructure development by originating, structuring, executing and managing end-to-end bankable projects in that space. It is expected that InfraCorp will mobilize local capital to unlock infrastructure investments. One of the objectives is to match liabilities with long term assets and channel them into areas that would begin to create competitive advantages or at least enable the competitive advantages that make Nigeria a more profitable market for investors.

2.    Local Currency Guarantees and other DFI Initiatives

The Infrastructure Credit Guarantee Company Limited (InfraCredit) has been set up as an institution to provide local currency guarantees in order to stimulate the investment by private sector in infrastructure assets. Besides InfraCredit, there are other financial institutions, including development finance institutions (DFIs) deploying blended finance strategies to provide design stage funding, concessional capital or technical assistance.

3.    The Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme (2019)

This scheme came into effect by virtue of the Executive Order No. 007 of 2019 signed by President Muhammadu Buhari, for the purpose of encouraging Public-Private Partnership intervention in the construction and refurbishment of road infrastructures. The scheme is to be in force for a period of 10 years.

Participants in the scheme shall be entitled to utilize the project cost incurred in the construction or refurbishment of eligible roads as a credit against Companies Income Tax payable. They are also entitled to a single uplift equivalent to the prevailing CBN Monetary Policy Rate plus 2 percent of the project cost. This uplift shall not constitute taxable income for a participant or beneficiary.

Some of the eligible roads under the scheme scheduled for substantial completion in 2021 include the dualization of Suleja-Minna Road (Niger), Ilorin-Jebba-Mokwa/Bokani Road (Kwara), Nnewi-Oduma-Mpu-Uburu (Enugu/Ebonyi), Yenagoa-Okaki-Kolo-Nembe-Brass Road (Bayelsa/Rivers), Bodo-Bonny Road with a bridge across the Opobo Channel (Rivers/Akwa Ibom), and the rehabilitation and expansion of Lagos-Badagry Expressway and Lagos-Ibadan Expressway. Presently, the Oworonshoki-Apapa Road is currently being constructed under the scheme.

4.    Establishment of Infrastructure Dedicated Funds

There are currently a number of specialized funds dedicated to infrastructure such as the Nigeria Infrastructure Fund by the NSIA and infrastructure funds by corporate entities such as Stanbic IBTC Infrastructure Fund, Chapel Hill Denham Nigeria Infrastructure Debt Fund and the fund to be managed by InfraCorp. These funds are particularly beneficial for viable projects particularly in their early stages.
5.    Securitization of Infrastructure Receivables

Securitization of receivables is a fairly novel financing practice in Nigeria. It involves receivables under contractual obligations from infrastructure projects being pooled together and transformed into tradable securities which will be issued to investors in exchange for cash. This creates liquidity for the investors who are able to channel this inflow into other infrastructure projects.

6.    Forward thinking regulations in the pipelines

There are also a number of legislative bills which are intended to encourage investment by the private sector. These include:

(a)    Federal Roads Bill 2021: One of the objectives of the bill is to facilitate the development of competitive markets and promote enabling environment for private sector participation in the development, financing, maintenance and improvement of roads in Nigeria. The bill provides that the Federal Roads Authority (to be established thereunder) shall enter into Private Sector Participation agreements including concessions and other forms of contracts as well as the issuance of permits and licences for the purpose of executing road the agreements and related contracts.

(b)    National Roads Fund Bill 2021: One of the objectives of this bill is to establish the National Roads Fund which shall be a repository of revenues accruing from road user related charges and other sources for financing. The fund shall be managed and administered for routine and periodic maintenance works on roads and related matters. Additionally, the bill sets out to provide predictable and sustainable funding for road maintenance in order to promote the sustainable development and management of the road network. Some of the sources of revenue for this fund are proposed to be toll fees, fuel levy on imported petroleum products and fuel levy on locally refined petroleum products.

(c)    National Inland Waterways Authority Bill 2019: The bill is intended to support the development, management and operations of Nigerian inland waterways. It also aims to encourage and facilitate private sector participation and investment in the provision of services and facilities in the country’s inland waterways by granting concessions, leases, management contracts, entering into joint venture contracts, issuing permits or any other agreement for achieving the objectives.

(d)    Nigerian Health Infrastructure Development Bank (Establishment) Bill, 2020: The bill intends to establish the Nigerian Health Infrastructure Development Bank which shall provide long-term credit facilities to Nigerian-owned health and wellbeing infrastructure enterprises or projects.

Recommendations and Conclusion

The following are additional recommendations which can improve the appetite of private investors in infrastructure funding:

(a). Clear Regulations: To gain the trust and confidence of the private sector, it is important that the legal and regulatory framework which governs private sector infrastructure financing is clear.

(b). Tax Incentives: Private investors should be offered more financial incentives to encourage their participation.

(c). Reduce Political Risk: There should be continuity in government policy. Government interference and corruption should be eliminated.

(d). Develop Capabilities in Managing PPPs: Public sector participation in PPP infrastructure projects should be efficiently managed. This will require capacity building for the public sector stakeholders.

There is the need for more effective collaboration between the public and private sector in order to align the Nigerian infrastructure sector with global standards. This should foster an enabling environment for private investments. The private sector should provide quality advice, properly structure projects, and demonstrate value-add to PPP projects.

Detail Commercial Solicitors is distinct as Nigeria’s first commercial solicitor firm to specialize exclusively in non-courtroom practice. Based in Lagos, Nigeria’s business capital, DETAIL is totally committed to its clients’ business objectives and reputed for dealing with the minutiae. Email:

Other Features