Development bank ‘finalising $1bn package’ for infrastructure investment in Nigeria

Akinwumi Adesina announced the initiative during his first official visit to Nigeria as AfDB president on 26 September.

However, Adesina said Nigeria should do more to “reap the dividends of devaluation”, including the creation of “incentives for foreign direct investments”. He also called on Nigeria’s leaders to “put in place the right incentives to boost private investment and revive growth”.

"With the right incentives, the country will come out of the recession, structurally better balanced," Adesina said. “The revenue base will be more diversified. The government will get more resources from better performing manufacturing and industrial sectors and SMEs. And, most importantly, unemployment will decline substantially.”

Adesina said the bank’s support package is expected to be considered by the AfDB’s board in October.

This would include $250 million for Nigeria’s North East Integrated Infrastructure Development Programme, $300m for the Abuja Infrastructure Project for integrated infrastructure, including water, sanitation, roads, and electricity and covering four satellite towns.

The AfDB said the value of its portfolio in Nigeria “is projected to increase from the current $4.6bn to $10bn by 2019”. Of this, “the private sector is expected to receive $6.9bn, while the public sector will get $2.1bn” excluding planned budget support of US $1bn.

According to the bank: “Nigeria has seen its economy shrink by 2.6% in the second quarter of 2016 compared with the same period in 2015. As a consequence, the country’s credit ratings have been downgraded by all the three major international credit rating agencies.”

Nigeria is a “key founding member of the AfDB, its largest shareholder, financier of the bank’s third resource window, the Nigeria Trust Fund and the Nigerian Technical Cooperation Fund”, the AfDB said. “The country is also among the largest beneficiaries of the bank’s loans and grants.”

In May 2015, the AfDB approved a $50m investment to become an “anchor investor” in a multinational power company with bases in Nigeria and Zambia. The bank said it was backing CEC Africa Investments Limited, which “seeks to acquire and develop distribution and transmission assets and complementary greenfield generation projects throughout sub-Saharan Africa”.

A report released last year from consultancy Ernst & Young (80-page / 2.4MB PDF) said Nigeria had been the largest recipient of foreign direct investment in Africa over the last decade, 80% of which had been invested in the oil and gas sector.

According to the 2015 Venture Finance in Africa report, by start-up funding platform Venture Capital for Africa (VC4Africa), Nigeria is among countries at the forefront of growing momentum for investment in start-ups in Africa. The report said the sum of all tracked investments in Nigerian start-ups in 2014 was $1.4m.

At the end of last year, Chinese steel pipe manufacturer Jiangsu Yulong Group broke ground for a major manufacturing plant in Nigeria's Lagos Lekki free trade zone, aimed at supplying the country’s developing oil and gas industries.

China said the first of three investment phases in the Yulong Lekki project would be an estimated $50m.