In a move to address the country’s infrastructure needs, the federal government of Nigeria has unveiled a plan to utilize locally available funds, particularly from pensions and life insurance, to develop essential infrastructure.
This announcement was made by the Minister of Finance and Coordinating Minister for the Economy, Wale Edun, during a briefing with State House reporters on Tuesday. The briefing followed a two-day meeting of the Federal Executive Council (FEC) presided over by President Bola Tinubu.
Highlighting the availability of substantial local funds, Edun stated, “There is upwards of N20 trillion available, and much of it is in short-term funding that doesn’t need to be. Pension money is long-term. People save over their lifetime for their pension.”
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This fund, he explained, would be directed towards infrastructure projects, including housing and long-term mortgage provision.
Edun noted the importance of utilizing local funds before seeking foreign investment, especially pension, life insurance, and investment funds.
“Nigeria is resilient, Nigerians are resilient. And the fact is that even before we start looking to foreign investors, we start looking to foreign funding, there is available in Nigeria, long term funds to fund infrastructure projects, and it’s within the pension, life insurance and investment fund industry generally,” he said.
The initiative aims to leverage these funds in partnership with the private sector. Edun elaborated, “In conversation, in consultation, collaboration and cooperation with the private sector, we are now able to announce and with the full knowledge and support of all parties, that there will be an initiative to fund growth through investment in infrastructure, including housing, provision of mortgages, long term mortgages, 25-year mortgages at relatively low interest rates.”
The government’s role, according to Edun, will initially include support mechanisms such as guarantees, especially in the current high-interest rate environment. However, as interest rates stabilize, the government’s direct involvement is expected to decrease, allowing private sector expertise to drive economic growth.
The plan aims to address both supply and demand in the housing market. This initiative is expected to significantly impact the construction industry and the overall economy.
“On the supply side, construction of houses will be funded. On the demand side, mortgages will be made available so that those constructing houses have an outlet and Nigerians who are saving so much by way of pension funds have the added bonus of access to affordable mortgages,” Edun explained.
The minister underscored the importance of this initiative within the broader context of President Tinubu’s macroeconomic reforms. He noted that these reforms are beginning to yield positive results, which bolsters the government’s commitment to this ambitious infrastructure development strategy.
Edun disclosed the plan as the Minister of State, Federal Capital Territory (FCT), Hajiya Mariya Mahmud, announced the FEC’s approval of several key infrastructure projects. These include the development of a bus terminal and transportation facilities, awarded to Messers Planet Project Limited at a cost of N51,025,172,424.90. Additionally, the FCT received approval for the construction of the Appeal Court, Abuja Division, costing N7,259,530,881.14, and the upgrading of Kwali-Ibu, valued at N7.6 billion.
The plan to borrow from domestic funds was activated as Nigeria works to meet the requirement of a fresh $750 million World Bank loan. The country is reportedly contemplating reinstating previously suspended fiscal measures, including telecom taxes and excise duties, to meet the World Bank’s requirement for the loan.
However, the federal government has been advised to prioritize its approach to infrastructural development, considering the backdrop of scarce resources and a rising public debt profile that is consuming the bulk of the nation’s revenue.
This advice follows the government’s move to begin the construction of the 700 km Lagos-Calabar Coastal Highway, expected to gulp N15 trillion, at N4 billion per kilometer. Many Nigerians, led by prominent members of the opposition parties, have called on President Bola Tinubu’s government to abort the project and use the fund for more pressing needs, especially the rehabilitation of deplorable roads across the country.