Emefiele harps on infrastructure growth to boost productivity

Governor of the Central Bank of Nigeria (CBN) , Mr Godwin Emefiele, has said that the country’s infrastructure has to improve by at least between 5 to 7 per cent annually for it to stimulate productivity and sustainable growth for businesses.

Emefiele, who was represented by the apex bank’s Director, Corporate Communications, Mr Osita Nwasinobi, made this disclosure while giving the keynote address at the Finance Correspondents Association of Nigeria’s (FICAN) 30th-anniversary conference and awards which had the theme: “Financing Infrastructure & SMEs for Inclusive Growth in the post-COVID-19 Economy”, which was held in Lagos on Saturday.

He explained that despite being a sector of the economy which has been a major driver of growth, innovation and job creation, the micro, small and medium enterprises (MSMEs) potential to spur growth and create jobs has been hampered by lack of access to quality infrastructure.

The CBN Governor noted that though countries in sub-Saharan Africa have been spending about 6 – 12 per cent of their GDP annually on infrastructure, Nigeria has been projected to need US$100 billion investment to fix its infrastructural gap annually for the next 30 years, which is 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.

Mr Emefiele asserted, “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 put in place several policy measures 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.

He reiterated that the CBN has remained 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.

Meanwhile, the Managing Director/CEO, Heritage Bank, Mr Ifie Sekibo, who was represented by Olusegun Akanji, Divisional Head, Strategy and Business Solutions, argued that the government cannot solve the country’s infrastructure challenges, noting that it is the private sector that will deliver the solution.

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.

Mr. Ifie noted that until the country developed an identity management system that delivers value to the citizenry, SMEs will continue to grapple with financing challenges.

He explained that though the banking industry has financed a lot of SMEs in terms of count, that it is the sector that has the largest numbers of bad loans and frauds in terms of count.

Mr Bola Koko, Managing Director of FMDQ Group, represented by Yomi Osinubi, Head Private Market, urged Nigeria to conceive a way its domestic capital market could fund the international capital market.

That, he said, was the only way that we could pluck the infrastructure rewards.

“If we want to pluck our infrastructure rewards, first of all we have to conceive of a way our domestic capital market can actually fund capital market.

“But the investors in debt capital market international and debt, money will come into an environment where capital is expected and there is an expectation of good management of those resources and cash flows will come back to it.

“So I think there’s the issue of maybe an underlying structure where we want to put in capital like road infrastructure tax payment.

” 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.

Mr Temidayo Obisan, Executive Commissioner representing the Director General of Securities and Exchange Commission (SEC) advised that the nation connected the right duration of money which according to him would be long-term. “The major thing to identify is 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 100bn, itching about 90 billion at the moment and there are some that are registered programmes of 200billion,” he said.

More so, the Chairman of FICAN, Titus Chima Nwokoji, said if Nigeria’s infrastructural gap, which is estimated to be N36 trillion annually, is addressed, a lot of the country’s economic challenges will be 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.