Moody’s: Nigeria’s rising population weighs on infrastructure

Nigeria's significant infrastructure deficit faces additional pressures from its rapidly growing population, with Moody's highlighting the need for increased private and multilateral sector involvement to bridge the gap. Kunal Govindia, Vice President of Project and Infrastructure Finance at Moody's, discussed the challenges and potential solutions in a recent interview. Nigeria has received funding from various multilateral organizations like the African Development Bank (AfDB), Afrexim Bank, World Bank, and IMF. Additionally, the private sector has shown interest through public-private partnerships. Despite these efforts, Nigeria still lags behind other emerging markets in terms of infrastructure development. Moody's emphasizes the need for scaling up existing initiatives due to the significant funding deficits in the country's infrastructure landscape. The country's institutional strength and governance frameworks have also been scrutinized in international surveys, indicating room for improvement compared to its Sub-Saharan African peers like Kenya and Ghana. The Nigerian government aims to attract more capital amidst lower tax revenues and rising debt by exploring innovative financing options. For example, leveraging off-balance products and contingent liabilities, such as providing guarantees for infrastructure projects, could help alleviate financial pressures. Public-private partnerships (PPP) are seen as a crucial avenue for infrastructure development. Projects like the Lagos fourth mainland bridge PPP have attracted interest from European bidders and may diversify funding sources beyond multilateral organizations. Encouraging the Nigerian pension industry to invest in infrastructure assets through third-party guarantees could also drive sector growth over time. However, challenges persist in Nigeria's PPP model, with concerns about risk allocation and investor participation. Strengthening PPP frameworks and successfully executing projects could build investor confidence and attract institutional funding. Moody's report emphasizes the significance of investing in the power sector to address businesses' concerns around reliable energy supply. Improving power infrastructure can catalyze economic growth and pave the way for enhanced social infrastructure development. Finding the right balance between regular and social infrastructure investments is key to addressing Nigeria's infrastructure challenges in the long run.