THE Central Bank of Nigeria (CBN) has said that a capital injection of N300 billion would be required by the Federal Government to put Nigeria roads in satisfactory conditions.Delivering a paper titled: Infrastructure, Industrialisation and the Nigerian Economy at the 2nd public lecture organised by Krestal Laurel Limited yesterday in Lagos, the CBN Governor, Lamido Sanusi, said government needs to invest about $100 billion over the next 10 years, in power, the rail system and oil and gas.According to the CBN governor, the state of infrastructure in Nigeria currently does not meet the requirement for economic growth.Sanusi disclosed that the Bankers Committee recently approved new strategies for growing credit to priority areas of the economy, which include power, transportation, infrastructure, agriculture, manufacturing and the development of Small and Medium Enterprises (SMEs).He stated that the Monetary Policy Committee of the CBN had provided N500 billion power/manufacturing facility for investment in debenture, issued by the Bank of Industry (BoI) for lending.He added that the CBN has also approved the establishment of a N200 billion Small and Medium Enterprises Credit Guarantee Scheme (SMECGS) to promote access to credit by manufacturers and SMEs in Nigeria.Sanusi disclosed that the scheme would be funded 100 per cent and managed by the CBN. This is to fast track the development of SMEs/manufacturing sector of the Nigerian economy by providing 80 per cent guarantees for loan amount of N100 million for five years, the CBN governor added.He said that the successful completion of recapitalisation by banks had engendered rapid growth in the sector, as its aggregate asset had grown from N2,767.78 billion in 2003 to N14,932 billion in March 2009, representing 439.4 per cent growth.The CBN chief stated: Sectoral credit utilisation and loans by deposit money banks in Nigeria revealed that total credit by banks to infrastructure increased from N363.7 billion in 2006 to N1,629.5 billion in 2009. Total credit by banks to the infrastructural sector grew astronomically by 169.8 per cent and 85.3 per cent in 2007 and 2008, respectively.Similarly, the share of credit to infrastructure as a percentage of total sectoral credit grew from 14.3 per cent in 2006 to 20.4, 23.3 and 16.9 per cent in 2007, 2008 and 2009, respectively.He said that sub-sectoral analysis showed that transport and communications obtained over 50 per cent of the credit extended by banks to the infrastructural sub-sector during the period under review except for 2009. This was followed by the building and construction sub-sector while public utilities had the lowest share.Sanusi attributed the low credit to the public utilities sector to the dominance of government investment overtime in the sub-sector, as banks find it very unprofitable to invest in, due to the inherent risks associated with financing such projects.He explained: As the percentage of the total sectoral credit utilised, credit to the transport and communication sub-sector was 7.5, 13.9, 16.7 and 8.0 per cent in 2006, 2007, and 2009, respectively. The decline in 2009 can be attributed to the global financial crisis and the banking sector reforms undertaken by the monetary authorities.However, Sanusi identified lack of viable utilities, lack of adequate legal environment and lack of sufficient domestic term finance, as some of the challenges facing infrastructure financing in Nigeria.Financing is critical to develop infrastructure not only for the usual reason of allocative efficiency, but also because of the distinctive economic characteristics of infrastructurea high capital intensity, long tenor projects, elements of natural monopoly and location-specific investment-all of which affect private sector incentives to commit long-term capital, he added.Sanusi stressed that the countrys ability to elicit the necessary environment for infrastructural financing, industrial sector growth and economic development must revolve around maintenance of appropriate macroeconomic environment; strong and deepened financial system with emphasis on capital market; willingness of Nigerian entrepreneurs to envision right investment climate and go for it, among others.
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