Nigeria is ripe for increasing private investment in infrastructure which is always driven by Bond issuance. The trend in government investment in infrastructure has fallen short over several decades, something that has created, cumulatively, an enormous deficit as infrastructure fails to meet the country’s needs.
The private sector has begun to respond, with the initiation of public-private partnerships and the launch of private-sector infrastructure funds. Gross capital formation is improving.
This is in keeping with global trends. Infrastructure funds play an increasingly large role in global finance, with the world’s largest fund manager, Blackrock, agreeing to buy Global Infrastructure Partners in a landmark US$ 12.5 billion deal announced this year.
Globally, infrastructure funds play an important role in providing institutional investors with long-term non-correlating returns, frequently with superior returns to, and less volatility than, public markets. In Nigeria, we find that infrastructure companies issue bonds at significant yield premiums to Federal Government of Nigeria bonds. Infrastructure provides an important investment opportunity.
