Nigeria’s infrastructural deficit may hit $878 billion 26yrs, report says

Nigeria’s infrastructural deficit is likely to widen to $878 billion in the next 26 years, a report by Agustos and Co. has said.

The report, ‘2024 Infrastructure Industry Report’, noted that though with a rapidly expanding and urbanising population, Nigeria faces a significant infrastructure deficit, the country’s current infrastructure stock constitutes only 30 per cent of gross domestic product (GDP), which is far below the World Bank’s benchmark of 70 per cent.

Also, the report finds that the nation ranks behind 23 other African countries on the African Development Bank’s Africa Infrastructure Development Index (AIDI).

It added: “This considerable deficit hampers economic growth, sustainable development, and poverty alleviation.”

It stressed that despite reforms such as the National Integrated Infrastructure Master Plan and the Highway Development Management Initiative, critical deficits remain as only 30 per cent of the country’s estimated 200,000 road networks are paved.

With about 64 per cent of the country’s resources going into debt servicing, the report also finds that Nigeria’s railway network is plagued by vandalism and funding gaps and is still undeveloped.

It added that despite being the cheapest means of transportation and capable of moving freight and passengers across longer distances more efficiently, rail transport constituted less than one per cent of the transportation industry’s contribution to Nigeria’s gross domestic product (GDP) in 2023, which further intensifies the load on roadways.

“The Federal Government’s allocation of N1.32 trillion (5% of the 2024 budget) for infrastructure is inadequate compared to the $100 billion annual target set by the Master Plan. To effectively address this deficit, increased private-sector investment is essential. However, private investment in Nigerian infrastructure has been low – totalling $8.4 billion from 2013 to 2023, compared to South Africa’s $17.2 billion”, it stated.

Indeed, industry experts attribute the low level of private sector investment in Nigerian infrastructure to several challenges, including limited long-term financing options, inadequate maintenance practices, corruption, weak contract enforcement, and insufficient project preparation.

Given the essential role of the private sector in addressing Nigeria’s infrastructure deficit, the report maintained that tackling these socio-economic and political obstacles to foster a more favourable investment climate is critical.

It identified key strategies to include establishing a dedicated fund for bankable projects, enhancing public sector expertise, enforcing contract sanctity, reducing corruption, and enacting targeted policy reforms.

“Ultimately, concerted efforts and collaboration between the public and private sectors will be essential in transforming Nigeria’s infrastructure landscape and driving long-term economic growth,” it said.

This report also delved into a comprehensive overview of the Infrastructure Industry in Nigeria, relevant industry data and forecasts, a highlight of recent developments in the industry, and a review of various infrastructure funding models in Nigeria.