Experts Highlight How PPPs Can Attract FDIs

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By Obinna Chima

In order to significantly raise the level of infrastructure in the country and enhance foreign direct investments (FDIs), experts have stressed the need for policy makers in Nigeria to embrace Public-Private Partnerships (PPP).

 The experts made this call at a one-day seminar organised by Akindelano Legal Practitioners (ALP) in Lagos recently. They noted that Nigeria’s huge infrastructure deficit cannot be tackled by government alone, considering the significant drop in earnings to the three tiers of governments.

Specifically, the Senior Transactor, Infrastructure Financing, Rand Merchant Bank Nigeria (RMB), Rachel More, stressed the need for a conducive environment for PPPs to thrive in the country, saying that the financing opportunities in Nigeria are huge.

She also said there must be transparency, consistency of policy and regulation in the system to encourage investors.

“There is a funding gap in Nigeria, given the state of the country’s infrastructure space. There is absolutely no way that the government can provide these infrastructures relying solely on public funds. So there is an opportunity to partner with the private sector to make those projects reach fruition and for the people to benefit.

“Yes, there are many hurdles such as inconsistencies in policies, the legal framework, so we need to create an enabling PPP environment. A lot depends on our policy makers and regulators. There are obviously constraints on the financing side.

“But you can unlock those constraints if there is certainty about what to expect going forward. So, if there is clarity, consistency and transparency, then you have investors more willing to throw monies at projects hoping that they would get fair returns on their investments,” she added.

More, noted that competition for global FDI has become stiffer, urging government to tackle militating hurdles and implement macroeconomic policies that would be accommodating.
On his part, a Director at FBN Quest, Patrick Mgbenwelu pointed out that FDIs plays a critical role in accelerating infrastructure growth in any economy. He also noted that a conducive environment remains a building block for the growth of any economy.

Once there is conducive environment, investors would be willing to come in and banks would be willing to lend, he said
Mgbenwelu added: “FDIs will only flow where there is a stable government, clear and consistent policy, and an investor-friendly environment. So, looking closely at each of these, the foregoing remains the direct correlation of these with what is required for driving the growth of infrastructure in Nigeria.

“According to one of the leading African regional banks, Nigeria’s infrastructure gap currently sits at $350 billion to be extended over the next 10 years. There are different figures however. This represents a significant opportunity for investors and financiers alike in the Nigerian economy. This would result to creation of jobs and growth in the non-oil sector.

“One of the major constraints is that the Nigerian banks is still not able to provide long term funding  no matter how much liquidity you have if you cannot finance infrastructure that is so much highly capital intensive, if you do not have long term liquidity,  you can as well change the subject,” he added.