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Finance experts make case for venture capital  in CBN’s N15trn Infrastructure Fund

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FINANCIAL experts are making a strong case for venture capital to boost Nigeria’s infrastructural development.

The experts’ suggestion is coming on the heels of the Central Bank of Nigeria’s announcement of the N15 trillion infraco fund, which focuses on addressing Nigeria’s weak and dilapidated infrastructure.

They canvass a proper guiding framework that can attract funds from private capital to fund  infrastructure without resorting to borrowing.

“Although the government proposes to fund the infraco by N15 trillion, private sector venture capitalists can actually fund 10 per cent of this venture and run it profitably and efficiently,” Economist and former Director-General of Abuja Chamber of Commerce Chijioke Ekechukwu told The ICIR.

Ekechukwu suggested that the government could create an avenue and enabling environment for private sector funding and use its own fund for other purposes.

Central Bank Governor Godwin Emefiele, on Tuesday at Annual Banking and Finance Conference, said that the Federal Government would launch InfraCorp Plc, the N15trn infrastructure fund, to boost funding for capital projects in October

He said that the project, which was conceptualised by the CBN alongside African Finance Corporation and the Nigerian Sovereign Investment Authority, would help to address the challenge of infrastructure deficit in the country.

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“In this regard, I am pleased to announce that InfraCorp, the infrastructure company being created by the CBN, African Finance Corporation and the Nigerian Sovereign Investment Authority to raise N15trn, will be unveiled in October 2021.

“InfraCorp would enable the use of mostly private capital to support infrastructure investment that will have a multiplier effect on growth across critical sectors.

“The purpose of the N15tn being raised is to address some of our infrastructure needs while providing reasonable returns to investors.

“We believe this well-structured fund can act as a catalyst for growth in the medium and the long run. The support of the banking community will be important in achieving this objective.”

The CBN governor also noted that Nigerian banks had become not only strong and resilient but had also carved a niche in the world.

To consolidate on the growth and resilience of Nigerian banks in the last decade, he said that the CBN would, in the next 12 months, be establishing the Nigerian International Financial Centre.

The NIFC, according to him, would act as an international gateway for capital and investments, driven by technology and payment system infrastructure.

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“We will also launch the National Theatre creative hubs for our youths as well as the E-naira project which will also debut in October 2021. The NIFC will take advantage of our existing laws such as the BOFIA 2020, NEPZA and other CBN regulations to create a fully global investment and a financial hub where monies, ideas, and technology will move freely without hindrance.”

Chief Executive Officer of Cowry Assets Management Johnson Chukwu told The ICIR that the Central Bank of Nigeria’s plan to set up the N15 trillion Infraco Fund would attract more private capital into infrastructure funding and prepare grounds for concessions and infrastructure funds.

Associate Consultant to the British Department for International Development Celestine Okeke  explained that with debt crisis rocking the government, there was a need to de-risk Nigeria’s funding options and attract equity and private sector capital into the economy.

“We are facing various risks in our infrastructure funding . The government can approach the World Bank to provide a template for its infrastructure funding to allow the inflow of private capital.”

 

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