By Folasade Akpan
Abuja, July 13, 2021 Vice President Yemi Osinbajo says the success of the tax credit initiative in Nigeria is an effective demonstration of the Public-Private Partnership (PPP) model of infrastructure development.
He said this on Tuesday in Abuja at an investors’ webinar organised by the Bureau of Public Enterprises (BPE) in collaboration with the Nigerian Investment Promotion Commission (NIPC) and the Nigerian Exchange Group (NGX).
The webinar which was titled “Investment Opportunities in Nigeria’s Privatisation and Economic Reform Programme”, had over 800 participants and prospective investors from across the world.
Osinbajo said that the initiative had proved beneficial to Nigerians especially in the area of road construction.
“Today several road projects that may have presented funding difficulties for the government have been done under a scheme that allows private entities, especially corporate organisations in Nigeria to build.
“While government forbears on taxes they pay to the extent of their financial obligations on infrastructure.
“This has proven to be very successful. For example, today the Nigeria Liquefied Natural Gas project is building the Bodo-Bonny bridge and road.
“This is a huge project that is costing almost N200 billion and it is building it on that tax credit basis.
“Also, Dangote built the Obajana-Kabba Road in Kogi State on that basis, and is currently doing the Apapa-Oworoshonki Road in Lagos also on this tax credit basis.”
However, he is optimistic that the Infrastructure Corporation of Nigeria (INFRACO), the N15 trillion fund for infrastructural development set up by the Federal Government, would make a major contribution to meeting the infrastructural needs of the Nigerian economy while promoting PPP.
Osinbajo reassured investors that the Federal Government was strongly committed to the PPP approach to engender national economic development and would continue to create the enabling environment for the required and much needed investment influence.
Mr Alex Okoh, the Director-General, BPE, reiterated government’s willingness to improve its public private investment engagement framework in order to generate the confidence required to attract private sector capital into the nation’s infrastructure space.
He said that for 2021, the bureau had listed over 36 projects and transactions in its schedule across diverse sectors of the economy for sale, concession or privatisation.
“These transactions and projects should see the sale and concession of power generation assets that can potentially add about 3,300 megawatts to the national power pool.
“The importance of power as an enabler for economic and industrial activities across all sectors of the economy continues to attract a strong focus and attention of the Federal Government.”
Okoh also said that the planned concession of two of the Federal Government’s Free Trade Zones, located in Calabar and Kano was expected to generate annual savings of about N5 billion for the federal treasury.
He added that it would also increase export earnings from the two special economic zones to about three billion dollars over a period of five to seven years.
Mr Godwin Emefiele, Governor of Central Bank of Nigeria (CBN), said that for Nigeria to attain growth numbers that were in tandem with the potential of its economy, it must enable investments in key sectors of the economy.
These investments, he said, would help to improve production of goods and services, support the nation’s efforts at creating jobs and higher wages for its growing population as well as harness its abundant resources.
According to him, given the current funding constraints on the Federal Government, it has to leverage on funds from the private sector.
He also said that investments by the private sector could significantly reduce the cost of doing business for households and businesses in Nigeria, whilst supporting increased investment and productivity of the economy.
“Some analysts estimate that over N350 trillion is needed to support infrastructure investments in Nigeria over the next 10 years.
“If these investments are made, Nigeria is likely to attain GDP growth rate of over 10 per cent annually, but it will be difficult to support these investments using government revenue sources alone.”
Emefiele said that the establishment of INFRACO had generated a lot of interest from both local and international private sector fund managers who were keen to work with it in deploying private sector capital to support investment in key infrastructure in Nigeria.
“Work has indeed attained an advanced stage and we have received the approval of the Chairman of the steering committee, Vice President, Prof. Osinbajo for the appointment of KPMG as the transaction advisers.
“Also, only recently we obtained approval for the appointment of asset managers.
“So, following the conclusion of this arrangement, and other activities, I would like to assure all of us that INFRACO is expected to begin full operation by the third quarter of 2021.”
Mrs Zainab Ahmed, Minister of Finance, Budget and National Planning, said that in spite of Nigeria’s numerous challenges which the government was confronting frontally, it remains a premium investment destination for both local and foreign investors in the African continent.
“As we all know, there is a direct correlation between risks and reward, as the higher the risk, the higher the associated reward.
“Given our population and the global appeal, Nigeria remains an economic hub on the African continent that is quite attractive. It is indeed an investor’s delight”, she said.
Success of tax credit initiative demonstrates effective PPP- Osinbajo
By Folasade Akpan