Financial analysts at FSDH Research have expressed the need for the Federal Government to involve the private sector to finance the infrastructure gap in Nigeria.
Noting that it is estimated that about $100 billion must be invested annually to finance infrastructure development in Nigeria to close the deficit, the analysts stated that the weak revenue generation of the government showed that the country cannot meet the capital required through annual budgetary allocation.
The FSDH researchers noted that the FGN 2019 budget call circular published on 25 October 2018 by the Budget Office of Nigeria, indicated that the capital expenditure for 2019 is set at about N1.98 trillion, 30.92 per cent lower than the N2.87 trillion approved in the 2018 budget.
They pointed out that adjusting the proposed capital expenditure in 2019 for inflation, represented a steep decline from the 2018 figure in real terms and underscores the need for Public-Private Partnerships (PPP) to drive infrastructure development in the country.
The draft 2019-2021 Medium-Term Expenditure Framework and Fiscal Strategy Paper indicated that the country was facing medium-term fiscal challenges, especially with respect to revenue generation.
The FSDH Research group stated that one of the reasons for the weak revenue generation in the country is inadequate infrastructure, adding that adequate and functional infrastructure will have a multiplier effect on the growth of the economy and should attract investment into the non-oil sector.
FSDH researchers were of the view that infrastructure development is critical for a sustainable growth of the Nigerian economy given the Federal Government’s revenue constraints, partnership arrangements with the private sector is a cost-effective funding model for infrastructure development in the country.
Commenting on the International Monetary Policy short term forecast on Nigerian economy, the research group said the report was unimpressive.
They, however, said that the uninspiring forecast stresses the need for Nigeria economic managers to implement additional growth-enhancing policies that would lift more Nigerians out of poverty.
The IMF released the forecast in its October edition of the World Economic Database, which accompanied its World Economic Outlook (WEO) titled ‘Challenges to Steady Growth’
The IMF predicts that the Nigerian population will grow faster than the growth in the real Gross Domestic Product (GDP) over the next five years. This means that expansion in Nigeria’s economy may not be enough to improve the standard of living of her citizens.
Nigeria’s inflation rate forecast by the IMF shows that there is no hope of single digit inflation rate before 2023. The double-digit inflation rate may make the yields on fixed income securities remain high in Nigeria and thus increase the finance cost for private sector operators.
FSDH Research group stated that the Nigerian economy had the potential to perform better than the IMF’s forecast.
However, for this to materialise, they advised that coordinated policies are urgently required to achieve strong and inclusive growth in security of lives and property, infrastructure, rule of law and diversification of the revenue and productive base of the economy areas.