The Nigerian Finance Minister Kemi Adeosun addressed an infrastructure breakfast series on financing infrastructure investment in Nigeria. She noted that Nigeria has a huge infrastructure deficit requiring $25 billion annually to address. The 2016 budget allocated 30% of its $6.06 trillion budget to capital expenditures focused on infrastructure to diversify the economy and stimulate sectors like agriculture, manufacturing and solid minerals. However, government funding alone is not enough so private sector investment through public-private partnerships is needed. The Minister emphasized that infrastructure development is critical to achieving economic diversification and growth, and that the government is open to collaborating with the private sector through platforms like this breakfast series.

1. Outlook of infrastructure investment in Nigeria
25 Jul2016
Kemi Adeosun
Summary
Address by the Honourable Minister of Finance, Mrs. Kemi Adeosun, at the inaugural
Xcellon Infrastructure breakfast series.
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Nigerian Finance Minister Kemi Adeosun
Address by the Honourable Minister of Finance, Mrs. Kemi
Adeosun, at the inaugural Xcellon Infrastructure breakfast series,
held at Transcorp Hilton Hotel Abuja, on Thursday, July 21 St
2016.
Good morning ladies and gentlemen. It is my distinct honour to
address you as the keynote speaker at this inaugural
infrastructure breakfast series hosted by Xcellon Capital Advisors
in collaboration with its strategic partners.
Let me start by commending the hosts for coming up with such a
lofty idea in the first place, of an infrastructure roundtable, as
a platform "where policy making meets with business". This
government encourages open and constructive dialogue with the
private sector. We believe that any opportunity of interacting and
exchanging ideas with the private sector, especially senior
executives and decision-makers like yourselves comes with
significant benefits for us.
We are quite mindful of the fact that the government does not
have a monopoly of ideas. We know that it is only through
continuous dialogue and cross-breeding of ideas that we can find
solutions to many of the problems bedeviling the nation, including

2. infrastructure deficit.
Now let me briefly speak on infrastructure financing in the 2016
budget and beyond. It is important to recall the background under
which the 2016 budget was designed and is running, vis a vis the
needs of infrastructure development. First, it could be recalled
that it has long been established that Nigeria has a huge
infrastructure deficit, requiring capital investment of about USD25
billion per annum over the next several years, for it to be
closed. Second, we note that with the drastic drop in revenues
from petroleum exports, public revenue has dropped by about
USD 20 billion per annum. Accordingly, the circumstances are
extraordinarily challenging; but, they are surmountable.
Government's strategy for infrastructure financing in 2016 and
beyond has been informed by its commitment to the goal of
diversification of the economy. The core elements of the
diversification drive is to rapidly stimulate real sector production,
particularly in agriculture and agro processing, manufacturing,
solid minerals and petrochemicals. The twin goals are (i) to, as
much as possible, satisfy aggregate demand with domestically
produced goods and particularly, ensure food self-sufficiency; (ii)
to export a variety of items in order to improve foreign exchange
earnings, thereby strengthening the economy's external balance.
Such a structure of production would guarantee the generation of
substantial employment opportunities and ensure inclusive
growth.
However, the strategic diversification programme will succeed
only if there is adequate and reliable infrastructure, particularly
infrastructure for power supply and transportation – by roads, rail
and water – as well as housing.

3. It is in view of this that the 2016 Budget has paid special
attention to infrastructure financing in a number of ways. First,
out of the total budget amount of about N6.06 trillion, N1.830
trillion or about 30°/o has been allocated to capital expenditure;
this compares superiorly with 2015 where the amount budgeted
for expenditure was only 14°/o of the total, while the actual
capital expenditure was 10% of the total. Second, 99% of the
capital expenditure is to be financed with borrowed funds, which
means that it is highly safeguarded, since it will not depend on the
materialization of projected revenue. Dependence on borrowing
will ensure availability of funds for the implementation of the
capital budget.
However, the funding by Government, relative to the
country's infrastructure needs is rather small. Therefore, the
private sector has a prominent role to play in this regard,
particularly, through Public Private Partnership. We believe that
the partnership between the public and private sector must be
deepened to tap the numerous advantages which is not only
financing opportunities, but also human capacity development,
leveraging modern technology and global best practices to deliver
value to society.
Indeed, it is gladdening that despite the
current economic downturn, there is a growing appetite by both
local and foreign investors to develop and operate viable
infrastructure projects in Nigeria. It is also important to note that
specialized organizations such as the Nigeria Sovereign
Investment Authority (NSIA) also undertake infrastructure
development within their investment guidelines, and desirably
use their own resources to leverage additional resources from

4. other investors.
Ladies and Gentlemen, I wish to emphasize that while
infrastructure deficit is huge, Nigeria has considerable potentials
for progressively financing the deficit, even from domestic
sources. For example, the local pension funds continues to grow.
As at today, the total size of pension assets is about N5.5 trillion.
With appropriate investment instruments in place, a sizeable
portion of such funds can be safely mobilized into infrastructure
development, again provided the risk and return guidelines of the
funds are adhered to.
In summary, the Government recognizes that infrastructure
development is critical for achieving its policy objective of
diversifying the economy for employment generation and
inclusive growth. Accordingly, it has accorded infrastructure
prominence in the 2016 Budget and this prominence will be
sustained through the medium term. Moreover, within safe
investment guidelines, government will provide the necessary
policy and regulatory support to enable various institutional
investors, including pension funds to play relevant roles in
infrastructure financing.
Let me conclude by thanking our host, Xcellon Capital Advisors
and its strategic partners and unequivocally tell you that we are
open to interfacing in this type of platform. We are confident that
with such collaboration, our country will easily overcome the
current challenges.
Thank you all and God bless you.

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