The Federal Government would need to spend the entire 2021 budget of N13.58tn continuously over the next century on capital expenditure to meet the target.
Agusto & Co., a rating agency and research firm, has said Nigeria has a huge infrastructural deficit and requires up to $3tn over the next 30 years to bridge this gap. At the rate of N13. 58 trillion per annum, it would take a hundred years.
It said, “The fact that less than N3tn was appropriated for capital expenditure reflects the urgency to increase infrastructure spending. Sadly, the dire fiscal position of the Federal Government of Nigeria has left little room for investments in infrastructure, a vital expenditure for an emerging economy like Nigeria.
“With a dwindling revenue base projected at N8tn and a widening budget deficit of over N6tn, according to the 2021 budget, conversations around optimising the country’s under-utilized assets are germane.”
According to Agusto & Co., between January 2021 and November 2022, the Nigerian government intends to sell or concession no fewer than 36 of its assets to raise funds to finance the 2021 budget and drive infrastructure development across the country.
It noted that different models had been deployed by the Nigerian government in the past to resuscitate non-performing and under-performing assets, either through outright sales to private investors or some form of public-private partnerships.
“While some projects have been successful, others have not been,” the firm said.
Agusto & Co said it recognised the role the National Council on Privatisation had played in driving the Federal Government’s programme of privatising public enterprises, carrying out sector reforms and liberalising key economic sectors, especially the infrastructure sector.
It said, “Some of the bills already passed into the Law in this respect are the Electric Power Sector Reform Act, the Telecommunications or NCC Act, the Pension Reform Act, the Debt Management Office (Cross Debt) Act and the Solid Minerals Act.
“These reforms have contributed notably to major breakthroughs in the telecommunications, power, oil and gas and financial sectors.
“However, lessons learnt from the past suggest that in ascertaining what assets or projects would be successful going forward, there are two tests that must be passed: the political feasibility of the project and the commercial viability of the asset.”