Chapel Hill Denham has said that Nigeria needed N2.8 trillion annually from private sector sources to fund infrastructure.
Bolaji Balogun, the company’s Chief Executive Officer, made the assertion at the 2015 Nigerian Debt Capital Markets (DCM) workshop organised by FMDQ OTC and the Securities and Exchange Commission (SEC) in Lagos.
Balogun said that the country’s present finance approach was not sustainable to tackle infrastructure challenges.
He said that banking sources were unable to meet the growing finance need of the nation’s infrastructure.
The chief executive officer said that banks had to grow loans at about 20 per cent per annum to meet the requirement, compared to about nine per cent stimulated by 2009 to 2014 Compound Annual Growth Rate (CAGR).
Speaking on the topic: “Financing Infrastructure via Debt Capital Markets’’, Balogun said that banking sources were unable to meet the growing finance need in Nigeria’s infrastructure.
He explained that banks had to grow loans at about 20 per cent per annum to meet this requirement compared to about nine per cent 2009 to 2014 CAGR.
CAGR is the mean annual growth rate of an investment over a specified period of time longer than one year.
He explained that tighter regulatory requirements under Basel III rules would increase the pricing and reduction in supply of long-term bank debt thereby restricting long-dated bank lending in the absence of long-term deposits.
Balogun, also a member of Nigerian DCM visioning team, said that domestic capital sources remained the best alternative source for financing necessary to make infrastructure sustainable and viable.
He listed the options for sustainable DCM structure to include project bonds and infrastructure debt funds.
Balogun said that given the relatively early stage of infrastructure financing in Nigeria, infrastructure debt funds represented the best near term approach for pension funds and other institutions to invest in infrastructure debt.
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