Developing countries such as Nigeria are in dire need of critical infrastructure development. The various options open to sovereign states and sub-nationals when it comes to raising the needed capital for infrastructure development was therefore the focal point of the 2023 International Rating Webinar hosted recently by DataPro Nigeria’s technology-driven credit rating agency.
All deliberated on the topic “Subnational Finance for Infrastructure issues for consideration.” The panellists unanimously agreed that securing suitable infrastructure financing is closely tied to the sustainability of such projects. They highlighted challenges faced by the capital market, such as political interference and the limited investment grade ratings for Nigerian states.
The panellists emphasized that while Banks are a viable source of funding for infrastructure projects, they are often unable to finance the long-term projects required for comprehensive infrastructure development. Consequently, capital markets play a crucial role in adopting equity financing for long-term infrastructure projects.
Notably, bankable projects are limited at the state level in Nigeria due to their relatively short governance term of eight years. The panellists reiterated the crucial role of rating agencies in project financing, especially in assessing bankable projects. The Panel discussants concluded that given the financial constraints facing Nigerian subnational entities, embracing alternatives such as Public-Private Partnerships is not a choice but a necessity for infrastructure development.
He stated that the issue of infrastructure development is closely tied to the quality of life. In quote he said “The truth is that the faster we accelerate infrastructure development on our Continent the quicker we can stop the brain drain and lift our people out of poverty.”