{"id":7960,"date":"2018-01-30T05:48:51","date_gmt":"2018-01-30T05:48:51","guid":{"rendered":"https:\/\/amazingproperty.com.ng\/blog\/infrastructure-finance-expert-advocates-infrastructure-fund-non-traditional-funding\/"},"modified":"2018-01-30T05:48:51","modified_gmt":"2018-01-30T05:48:51","slug":"infrastructure-finance-expert-advocates-infrastructure-fund-non-traditional-funding","status":"publish","type":"post","link":"https:\/\/amazingproperty.com.ng\/blog\/infrastructure-finance-expert-advocates-infrastructure-fund-non-traditional-funding\/","title":{"rendered":"Infrastructure finance: Expert advocates Infrastructure Fund, non-traditional funding"},"content":{"rendered":"<p>\n<\/p>\n<div itemprop=\"description\" readability=\"125\">\n<p>By\u00a0<span style=\"font-size: 0.9375rem;\">Kingsley Adegboye<\/span><\/p>\n<p class=\"MsoNormal\">Following the huge <a href=\"https:\/\/amazingproperty.com.ng\/blog\/construction-loans-for-commercial-and-residential-builders\/\">financing<\/a> gaps that exist in the area of infrastructure finance and traditional <a href=\"https:\/\/amazingproperty.com.ng\/blog\/get-quick-loan-for-real-estate-investment\/\">funding<\/a> that cannot cover the long-term needs of most countries, the need for Nigeria to explore non-traditional ways of funding infrastructure has been advocated. This is coming against the fact that government revenue is limited, obligatory spending is higher than the revenues and leverage is too high.<\/p>\n<p><!-- between content ad --><\/p>\n<figure id=\"attachment_921887\" style=\"max-width: 412px\" class=\"wp-caption alignnone\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" src=\"https:\/\/i0.wp.com\/cdn.vanguardngr.com\/wp-content\/uploads\/2018\/01\/Housing15.jpg?resize=412%2C219&#038;ssl=1\" data-lazy-src=\"https:\/\/i0.wp.com\/cdn.vanguardngr.com\/wp-content\/plugins\/lazy-load\/images\/1x1.trans.gif?ssl=1\" class=\"size-full wp-image-921887\" alt=\"\" width=\"412\" height=\"219\" srcset=\"https:\/\/cdn.vanguardngr.com\/wp-content\/uploads\/2018\/01\/Housing15.jpg 412w, https:\/\/cdn.vanguardngr.com\/wp-content\/uploads\/2018\/01\/Housing15-300x159.jpg 300w, https:\/\/cdn.vanguardngr.com\/wp-content\/uploads\/2018\/01\/Housing15-58x31.jpg 58w, https:\/\/cdn.vanguardngr.com\/wp-content\/uploads\/2018\/01\/Housing15-260x138.jpg 260w, https:\/\/cdn.vanguardngr.com\/wp-content\/uploads\/2018\/01\/Housing15-200x106.jpg 200w\" sizes=\"auto, (max-width: 412px) 100vw, 412px\"\/><noscript><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-921887\" src=\"https:\/\/i0.wp.com\/cdn.vanguardngr.com\/wp-content\/uploads\/2018\/01\/Housing15.jpg?resize=412%2C219&#038;ssl=1\" alt=\"\" width=\"412\" height=\"219\" srcset=\"https:\/\/cdn.vanguardngr.com\/wp-content\/uploads\/2018\/01\/Housing15.jpg 412w, https:\/\/cdn.vanguardngr.com\/wp-content\/uploads\/2018\/01\/Housing15-300x159.jpg 300w, https:\/\/cdn.vanguardngr.com\/wp-content\/uploads\/2018\/01\/Housing15-58x31.jpg 58w, https:\/\/cdn.vanguardngr.com\/wp-content\/uploads\/2018\/01\/Housing15-260x138.jpg 260w, https:\/\/cdn.vanguardngr.com\/wp-content\/uploads\/2018\/01\/Housing15-200x106.jpg 200w\" sizes=\"auto, (max-width: 412px) 100vw, 412px\"\/><\/noscript><figcaption class=\"wp-caption-text\"><a href=\"https:\/\/amazingproperty.com.ng\/blog\/sell-your-home-online-fast\/\">Housing<\/a> estate in Lagos<\/figcaption><\/figure>\n<p class=\"MsoNormal\">Speaking as a guest speaker on the theme: Infrastructure Financing Options in a Challenging Economy, at the International <a href=\"https:\/\/amazingproperty.com.ng\/blog\/property-center-nigeria\/\">Real Estate<\/a> Federation, FIABCI-Nigeria, in Lagos at the weekend, Mr. Bode Agusto, a finance expert and an independent researcher and consultant, the new approach to infrastructure financing in the country has become imperative because the traditional way which makes the government to be the sole provider of funds for infrastructure investment and projects will be executed through Government Ministries, Departments and Agencies, MDAs, pointing out that \u201cUnder this model, in Nigeria, infrastructure projects become politicised as budgets are approved late. There is a proliferation of projects, scarce funds are spread thinly among the numerous projects and we rarely complete any major project, for instance, Lagos-Ibadan Expressway project.\u201d<\/p>\n<p class=\"MsoNormal\">Agusto who said the Federal Government could create an Infrastructure Fund that it will employ to partner with the private sector for the development of projects with strong economics and huge social impact, added that it can then pay N0.5 trillion annually (about half of what it currently spends) into this fund, set up a strong governance process for managing this fund.<\/p>\n<p class=\"MsoNormal\">He said the fund will make, on average, an equity investment of 25 per cent on each project, set up a company incorporated under the Companies Act to own the project such as the National Grid Plc, while others (local businesses, foreign businesses and IDAs) will own the remaining 75 per cent equity and manage the company. This means that potentially, the Federal Government can invest N2 trillion annually from the infrastructure fund.<\/p>\n<p class=\"MsoNormal\">\u201cEach company will pursue its own project, complete it and bill the public for the use of its services. They will prepare annual report and accounts, subject these to external audits, make these accounts public, hold annual meeting of shareholders, pay tax on their profit and pay dividends out of their profit after tax. The companies can also be <a href=\"https:\/\/amazingproperty.com.ng\/blog\/nigeria-property-center\/\">listed<\/a> on the NSE to improve their access to capital.<\/p>\n<p class=\"MsoNormal\">\u201cA principal concern of the government is how the poor and weak in society access these services. In agreeing fares with providers of rolling stock for railway services, government will negotiate subsidies for children, senior citizens and the physically challenged. In setting electricity tariffs, government will estimate the monthly consumption of a poor household and, in agreeing tariffs, ensure that consumption up to that threshold is heavily subsidised.<\/p>\n<p class=\"MsoNormal\">\u201cSubsidies fashioned in this way will not blow a big hole in the budget like PMS subsidy currently does. There will be no need for the government to set the domestic price of gas and they will also be able to agree on electricity tariffs that will allow an efficient player cover its cost of capital.<\/p>\n<p class=\"MsoNormal\">\u201cCan this work? The NLNG is perhaps the best example of an infrastructure project that has employed this model. Nigeria sold 5 per cent of its equity stake in the Shell JV to fund its 49 per cent equity contribution to Nigeria LNG. Three international oil companies own the remaining 51 per cent. The business has thrived, building six trains of LNG largely from internally- generated profits and commercial <a href=\"https:\/\/amazingproperty.com.ng\/blog\/fast-flexible-real-estate-loans-usa\/\">loans<\/a>.<\/p>\n<p class=\"MsoNormal\">\u201cA non-traditional way is for the government to partner for infrastructure investment. Partners are typically International Development Agencies, IDAs, local businesses and foreign businesses. All these people want their money back plus some returns. Therefore, infrastructure projects that lend themselves towards public\/private partnerships are those with strong economics, for instance, the national grid and rail transportation.<\/p>\n<p class=\"MsoNormal\">\u201cHow can the Government partner with the private sector to fund infrastructure projects? Let us use the Federal Government as an example. The Federal Government makes a list of the key projects that she would like to undertake and divide them into two categories. Category1 will be those with strong economics and social impact e.g. the National Grid, Railway Infrastructure, Railway Rolling Stock, 2nd Niger Bridge; Category 2 will be those with weak economics but strong social impact e.g. water for rural communities, rural electrification,\u201d the guest speaker averred.<\/p>\n<\/p><\/div>\n<p><a hre=\"https:\/\/www.vanguardngr.com\/2018\/01\/infrastructure-finance-expert-advocates-infrastructure-fund-non-traditional-funding\/\"> Vanguard <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By\u00a0Kingsley Adegboye Following the huge financing gaps that exist in the area of infrastructure finance and &hellip; <a title=\"Infrastructure finance: Expert advocates Infrastructure Fund, non-traditional funding\" class=\"hm-read-more\" href=\"https:\/\/amazingproperty.com.ng\/blog\/infrastructure-finance-expert-advocates-infrastructure-fund-non-traditional-funding\/\"><span class=\"screen-reader-text\">Infrastructure finance: Expert advocates Infrastructure Fund, non-traditional funding<\/span>Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":7744,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[4],"tags":[1399,447,617,684,604,522,1434,818,15307],"class_list":["post-7960","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opportunities-in-new-markets","tag-development","tag-financing","tag-house","tag-lagos","tag-loans","tag-nigeria","tag-pms","tag-real","tag-ulta"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/amazingproperty.com.ng\/blog\/wp-content\/uploads\/2018\/01\/Housing15.jpg?fit=412%2C219&ssl=1","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/amazingproperty.com.ng\/blog\/wp-json\/wp\/v2\/posts\/7960","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/amazingproperty.com.ng\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/amazingproperty.com.ng\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/amazingproperty.com.ng\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/amazingproperty.com.ng\/blog\/wp-json\/wp\/v2\/comments?post=7960"}],"version-history":[{"count":0,"href":"https:\/\/amazingproperty.com.ng\/blog\/wp-json\/wp\/v2\/posts\/7960\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/amazingproperty.com.ng\/blog\/wp-json\/wp\/v2\/media\/7744"}],"wp:attachment":[{"href":"https:\/\/amazingproperty.com.ng\/blog\/wp-json\/wp\/v2\/media?parent=7960"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/amazingproperty.com.ng\/blog\/wp-json\/wp\/v2\/categories?post=7960"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/amazingproperty.com.ng\/blog\/wp-json\/wp\/v2\/tags?post=7960"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}