Securities and Exchange Commission warns that Nigeria's infrastructural deficit could hit $878bn by 2040

NIGERIA'S infrastructural deficit could hit $878bn by 2040 according to a recent report published by the Securities and Exchange Commission (Sec) which has warned that the limited amount of facilities available could severely hamper economic growth.

Currently reeling under the weight of limited infrastructure like roads, railway networks, hospitals, power stations, water plants and clinics, Nigeria's economy is struggling to expand. With the country's annual budget only being a mere $20bn per annum, the government is struggling to fund capital projects.

With about 70% of the Nigerian budget going on recurrent costs, there is always very little left for capital projects, so the Sec is trying to generate private sector investment in the economy. In a bid to raise funds, the Sec has launched a green bond scheme, which it hopes will appeal to investors.

Speaking at the at an 2018 annual workshop organised by the Capital Market Correspondents Association of Nigeria, in Lagos, Mary Uduk, the SEC's acting director-general, said: “The future holds opportunities for renewable energy, energy efficiency, infrastructure, food, agriculture and the task ahead is to ensure funds are channelled to green projects with multiple socio-merits.”

"The biggest opportunity, to my mind, which green bond issuances will present, is the potential to solve Nigeria’s infrastructural deficits, improve agriculture and alleviate poverty while also protecting the environment. It is a multi-faceted strategy,”

She added that there must be more domestic participation in green bonds investment for Nigeria to claw its way out of deficit in infrastructure, power and energy, transportation and eliminating environmental degradation. According to Mrs Uduk, it was necessary for Nigeria to stand at the forefront of innovations and initiatives, adding that the second tranche of green bonds which had been issued presented an opportunity for the country to solve its infrastructural deficit.

Bola Onadele, the managing director of FMDQ OTC Securities Exchange, said that $155bn had been realised from the green bonds issuance, gaining the attention of investors. He added that Nigeria's resources were not growing in tandem with the rising population and the reason for the nation's woeful performance in the power and energy sector was due to its inability to tap into energy utilisation from the sun like European countries.

According to Mr Onadele, the challenges affecting green bonds include low levels of local participation in green bond verifiers, lack of investible projects, the cost of verification and a lack of understanding on the part of key investors. He added: “Green bond investors enjoy waivers relating to tax and in the next 15 years, we will require $7trn in investments connecting sustainable finance to capital markets.”