Nigeria’s Infrastructure must improve by 7% Yearly To Boost Productivity- CBN
Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele said the country’s infrastructure must improve by between five and seven percent to stimulate productivity and sustainable growth for businesses.
Emefiele who delivered a keynote address with the theme: “Financing Infrastructure & SMEs for inclusive growth in the post-COVID-19 economy,” at the 30th anniversary conference and awards of the Finance Correspondents Association of Nigeria’s (FICAN) in Lagos on Saturday in Lagos on Saturday, agreed that the potential of the Micro, Small and Medium Enterprises (MSMEs) sector to spur growth and create jobs has been hampered by the lack of access to quality infrastructure.
The governor, who was represented by the apex bank’s Director, Corporate Communications, Osita Nwasinobi, noted that although countries in sub-Saharan Africa spend about 6 to 12 percent of their GDP annually on infrastructure, Nigeria needs US$100bn investment to fix its infrastructural gap annually for the next 30 years, currently estimated to be about 1.2 per cent of its Gross Domestic Product (GDP).
“Beyond infrastructure, access to finance remains one of the biggest threats to MSME development in both developed and developing economies alike, with serious implications for productivity, economic development, and job creation,” he added.
Emefiele stressed that “the financing gap for MSMEs in Nigeria is estimated to be about N617.3 billion annually pre-Covid-19 pandemic, as less than 5 percent of these businesses have access to adequate finance to support their working capital and business expansion needs (PwC). Other constraints to MSME development in Nigeria, as noted in the survey, included difficulty in finding customers, infrastructure deficit, insufficient cash flows, multiple taxations, regulatory burden, and sub-optimal implementation of the provisions of the MSME policy.”
Meanwhile, he revealed that the apex bank has set several policy measures in motion to stimulate economic growth and reduce the impact of the COVID-19 pandemic on Nigerians and its intervention efforts represented about 3.5 per cent of the GDP.
According to him, the CBN remains committed to fulfilling its developmental mandate by collaborating with stakeholders across infrastructure and MSME segments in order to boost domestic output.
“There is an urgent need for fiscal authorities to collaborate with the Central Bank of Nigeria to change the lenses through which they look at MSMEs and infrastructure development, by developing innovative policy measures to unlock the potential of these enterprises to drive innovation and industrialisation. Distinguished ladies and gentlemen, without adequate infrastructure, the Nigerian economy cannot overcome its structural challenges and achieve growth, as well as development,” the CBN Governor opined.
On his part, the Managing Director/Chief Executive, Heritage Bank, Ifie Sekibo, warned that government cannot solve the country’s infrastructure challenges, noting that it is the private sector that will deliver the solution.
Sekibo, who was represented by Olusegun Akanji, Divisional Head, Strategy and Business Solutions, added that the government can only provide enabling policies that will support private sector interventions. We need the global private sector intervention to help us achieve a vision of infrastructural development,” he mentioned.
Until the country develops an identity management system that delivers value to the citizenry, he stressed, SME operators will continue to grapple with financing challenges.
Although the banking industry has financed a lot of SMEs in terms of count, he lamented that it the sector has the largest numbers of bad loans and frauds in terms of count.
Bola Onadele.Koko, Managing Director of FMDQ Group, called on the country’s leaders to conceive a way its domestic capital market could attract funds from the domestic and international investors into the local environment.
Represented by Yomi Osinubi, Head Private Market, of the group, Onadele believes that “if you want SMEs to get the best benefits of infrastructure development in the country, the CBN Governor mentioned the largest areas of course for SMEs which is energy. The second largest is the logistics, movements of cargo around the country,” he said.
Temidayo Obisan, Executive Commissioner, Securities & Exchange Commission (SEC), who representing the Director-General, urged the nation to identify “that infrastructure is a long-term thing, so it is essential we connect the right duration of money which is long term capital which is what capital market provides and which sec as a regulator should.
“We have about three surviving infrastructure focus funds in Nigeria now that are totalling almost a N100bn, itching about N90bn at the moment and there are some that are registered programmes of N200bn,” he said.
Welcoming the guests, the Chairman of FICAN, Titus Chima Nwokoji, said when Nigeria’s infrastructural gap, which is estimated to be N36 trillion annually, is addressed, a lot of the country’s economic challenges would have been easily tackled.
“And coming out of COVID-19 pandemic, we know that if the infrastructure is fixed and SMEs thrive, the growth that you see will be faster,” he added.