March 23, 2021
InfraCorp set to attract global investors to Nigerian infrastructure
On Tuesday, March 23, the Africa Center hosted, in partnership with the US-Nigeria Council, a panel on investing in infrastructure in Nigeria, featuring a launch of the new and innovative Infrastructure Corporation of Nigeria (InfraCorp). The event convened InfraCorp’s funding partners: the Central Bank of Nigeria, represented by Governor Mr. Godwin Emefiele and Special Advisor to the Governor on Financial Markets Mr. Emmanuel Ukeje; the Nigeria Sovereign Investment Authority (NSIA), represented by Managing Director and Chief Executive Officer Mr. Uche Orji; and the Africa Finance Corporation (AFC), represented by President and Chief Executive Officer Mr. Samaila Zubairu. Africa Center Senior Fellow Ms. Aubrey Hruby provided moderation.
In her opening comments, Africa Center Senior Fellow Amb. Rama Yade framed the event in terms of African agency and innovation in driving economic recovery after COVID-19, reflecting the ethos of the Center’s Afro-Century Initiative, founded in grateful partnership with the Africa Finance Corporation. Amb. Terence McCulley added, as chairman of the US-Nigeria Council, that creativity is needed to maintain the momentum on US-Nigeria commercial exchanges, and that InfraCorp provides a welcome opportunity to do just that.
In the moderated discussion, the speakers laid out the key points of InfraCorp and made the case for its appeal to global investors.
Structure: InfraCorp will be managed by an independent fund manager that will mobilize additional local and global capital in a long-term fund structure. The target for the fund will be $37 billion, and InfraCorp will have the capacity to raise in both naira and dollars.
Timeline: In the search for an asset manager, the request for proposals process will conclude next week, says Zubairu, with interviews by an expert committee leading to the hire of a fund manager by mid-April. The three funding partners have provided an initial capital of $2.4 billion as a first close, and are otherwise “set to go,” in Zubairu’s words. InfraCorp will start making investments immediately, says Orji, seeking commitments “asset by asset and project by project.”
Priorities: InfraCorp will focus on energy, transportation and logistics, telecommunications, and social infrastructure. Opportunities to support green growth are also available, as Nigeria offers avenues for solar, hydro, and gas, as well as supporting oil companies in their efforts to go green.
Impact: For Emefiele, the core of InfraCorp is to tackle Nigeria’s infrastructure deficit and reduce the costs of doing business. InfraCorp is indicative of a maturation of the Nigerian financial market according to Orji. By supporting project development, financing infrastructure, and mobilizing private capital, InfraCorp will help to combat issues of underemployment and inefficiency across sectors, says Zubairu.
Shifting perceptions: According to Orji, the call for applications for the asset manager position was met with initial skepticism but the response has evolved into real inquiry. He also stressed that once firms have invested in Nigeria, he has rarely seen them leave. As such, he is confident that after several transactions, investor interest will only grow. He further highlighted investor interest by raising the oversubscription of an NSIA project with Moroccan fertilizer giant OCP.
For Orji, risk perception is largely a lack of understanding, not a lack of genuine opportunity or returns. Returns are dependent on the type of infrastructure, agree Orji and Zubairu, but in the opinion of the AFC head, “Nigeria has performed very well in providing returns relative to risk.”
Missed the event? Watch the webcast below and engage us @ACAfricaCenter with any questions, comments, or feedback.
Further reading:
Image: Photo: Flickr/World Bank/Arne Hoel