Emefiele: InfraCo to Unlock N8 trillion Pension Funds’ Assets for Deployment to Bankable Infrastructure Projects Across Nigeria

 *Signs terms sheet with four asset managers

Nume Ekeghe    
The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele yesterday announced that the Infrastructure Corporation of Nigeria (InfraCo) would unlock N8 trillion of pension funds’ assets to be deployed into bankable infrastructure projects across Nigeria. Emefiele also announced the appointment of Mr. Lazarus Angbazo as Chief Executive Officer of InfraCo and signed terms agreement with four Infrastructure Asset Managers – the AAA Consortium, Chapel Hill Denham, Africa Infrastructure Investment Managers and Sanlam Infra works.

Infracorp is being promoted by the Africa Finance Corporation (AFC) and the Nigerian Sovereign Investment Authority, with KPMG as transaction advisers. Also, with their Legal Advisers – Kenna Partners, Olaniwun Ajayi, and Ukiri and Lijadu – they are to deliver InfraCo as a catalyst to accelerate public-private solutions for infrastructure in Nigeria, with initial capital raising of N15 trillion. At a press briefing in Lagos yesterday, Emefiele said:

“We have done our scoping, we believe that a substantial portion of the N15 trillion is available locally. There is a lot of liquidity today not just in the banking industry; there is a lot of liquidity that is currently held by our pension funds managers. I understand from the last count that the size of Nigeria pension fund is over N13 trillion. I am told that in another three to five years, Nigerian pension assets would rise to almost N20 trillion to N25 trillion.

“There is a lot of local capital and liquidity in Nigeria and what we would like to say is that we would begin by talking to people, the institutions that have this liquidity to come in and take up this kind of debt and that is why I am trying to say that out of the N14 trillion that will be debt, we imagine that on looking at it on a straight line, we should be looking at N8- N9 trillion available say within the Nigerian banking industry and the pension fund administrators.

“And of course, naturally the rest will be raised through foreign debt like Eurobond and the rest of them. So, yes, there will be Eurobond, but because we are moving very quickly, very fast, we will be looking at more in Nigeria.“So, let’s not forget these are projects from viability stand points and that they will be generating Naira revenue. Most of the roads will be carrying the traffic cam, they will be tolled but we will try as much as possible to ensure that the tolls are not too high and become so burdensome on the road users.

“The important thing I think is we must begin to come to a realisation that for us to have good infrastructure, for us to have good roads, we will need to make them commercially viable and that means we have to really pay for them.”Further speaking on how InfraCo would be financed, Emefiele said the first phase of this financing is to raise N14 trillion debt plus N1 trillion equity which is being contributed by the CBN, AFC and NSIA. He added: “Upon signing the terms sheet today, we will go straight into execution mode because Nigeria very badly needs to develop its infrastructure.

There is infrastructure deficit in the public sector, there is infrastructure deficit in the private sector and we would like to see that we played our part at this time to support the efforts of not just the government but also the private sector in doing whatever can be done to develop infrastructure in Nigeria. “We are determined to do this because we all travel to different parts of the world and we see state of the development of their infrastructure and indeed most of the developing countries that we like to compare ourselves with also have some sort of our type of InfraCo and that is why they have moved very aggressively in developing infrastructure in those countries.

We are determined to see to it that from today InfraCo is open for business.“From today we are unveiling InfraCo to Nigeria and because we are sure, we are confident that the funding of N15 trillion is available.“In other countries where infrastructure corporations have worked, pension funds have been used to develop the infrastructure of those countries.

“Emerging market economies have used private sector funds coming from either pension fund managers or the banking industry to set an example that we here in Nigeria stand ready to support infrastructure development, to support the government in the development of Nigeria infrastructure, and that is our solemn pledge today that we will.

I am so sure that with the gap in the Nigerian infrastructure, this is the first tranche and I believe it will soon very quickly be used up and we can now go to a phase two and phase three.“Nigeria as the biggest economy in Africa and a country with the largest population in Africa truly deserves that at this time. Its infrastructure must be top notch so as to continue to encourage investors both locally and foreign to have confidence to come and do business in Nigeria.”On his part, Angbazo said:

“The specific mission of InfraCo is to harness opportunities for infrastructure development in Nigeria by originating, structuring, executing and managing end-to-end bankable projects. These projects would be managed privately by asset managers that are private entities and they would do this in partnership with public and private sector participants to provide long and attractive investment returns required not just in terms of financial returns but also in terms of social impact.”“InfraCo is a dedicated vehicle to unlock and enable development of infrastructure.

It is a catalyst to unlock private capital by leveraging local and international pools of capital and finally it is an enabler for economic growth and development by driving local capacity building, inclusive growth and development with impact.”