* Says rising debt burden calls for pressing, basic rethink
Ndubuisi Francis in Abuja
Renowned monetary professional, Prof. Uche Uwaleke, has acknowledged that Nigeria’s rising public debt burden has made an pressing case for a basic rethink of how the nation funds infrastructure.
He acknowledged that the Nigerian capital market gives viable alternate options by way of infrastructure bonds, infrastructure funds, infrastructure funding trusts and different structured funding automobiles that may appeal to institutional traders and abnormal Nigerians into commercially viable tasks.
In an article, ‘Beyond Government Borrowing: How the Capital Market can Unlock Opportunities to Finance Nigeria’s Infrastructure,’ he argued that the entire thought was to maneuver past a mannequin by which authorities borrows and carries many of the monetary dangers, in direction of one by which authorities makes use of its establishments, property and regulatory affect to draw non-public funding.
Citing statistics by the Debt Management Office (DMO), Uwaleke famous that Nigeria’s complete public debt rallied to N166.79 trillion by June 30, 2026, representing a rise of N14.39 trillion, or 9.4 per cent, in contrast with the N152.40 trillion recorded a yr earlier.
“Of this quantity, home debt accounted for N91.59 trillion (54.91 per cent), whereas exterior debt stood at N75.20 trillion (45.09 per cent).
“The debt stock also increased by N7.44 trillion in just three months, from N159.35 trillion at the end of March 2026. The pressure is compounded by the cost of servicing these obligations: Nigeria is projected to spend about US$11.6 billion on debt service in 2026, close to half of expected government revenue,” he mentioned.
Against this backdrop, the one-time finance commissioner in Imo State mentioned the query was now not how far more authorities can borrow, however the way it can mobilise long-term home and worldwide capital to finance vital infrastructure with out additional deepening the general public debt burden.
According to him, the Nigerian capital market gives viable alternate options by way of infrastructure bonds, infrastructure funds, infrastructure funding trusts and different structured funding automobiles that may appeal to institutional traders and abnormal Nigerians into commercially viable tasks.
Properly structured, he defined that these devices can channel non-public financial savings into productive infrastructure, whereas guaranteeing that long-term venture financing was supported by the income streams generated by the property themselves, making such investments financially sustainable and, within the case of project-backed bonds, probably self-liquidating relatively than an extra burden on basic authorities revenues.
“The complete thought is to maneuver past a mannequin by which authorities borrows and carries many of the monetary threat, in direction of one by which authorities makes use of its establishments, property and regulatory affect to draw non-public funding.
“Properly structured infrastructure bonds, for instance, can present long-term financing whose compensation is supported by the money flows of the infrastructure venture itself. Where tolls, person costs, power-purchase agreements or different predictable revenues are enough to fulfill curiosity and principal repayments, the borrowing can turn into self-liquidating relatively than a unbroken declare on basic authorities revenues.
“Infrastructure funds and investment trusts can go further by allowing investors to acquire an economic interest in infrastructure assets and share in the income they generate, while diversifying risk across a portfolio of projects,” the Professor of Capital Market on the Nasarawa State University, Keffi and President of the Capital Market Academics of Nigeria (CMAN) mentioned.
Uwaleke defined {that a} good instance of how the federal government can use exterior financing and a comparatively modest preliminary funds contribution to ship main infrastructure was the Abuja-Keffi-Akwanga-Lafia-Makurdi street, including that the venture was executed by China Harbour Engineering Company underneath an Engineering, Procurement and Construction with Finance (EPC+F) association.
He mentioned 85 per cent ($460.8 million) of the contract sum of $542.14 million was financed by way of a China Exim Bank facility, whereas the Federal Government supplied the remaining 15 per cent ($81.32 million) as counterpart funding.
“The venture demonstrates the potential advantages of utilizing structured financing to cut back the quick name on authorities budgetary assets. Rather than financing the complete building price from public funds, authorities contributed a fraction of the preliminary financing requirement and obtained a significant transport asset.
“The broader lesson is that infrastructure should be structured around identifiable revenue streams and repayment capacity. This is where the Nigerian capital market can play a much more significant role,” he confused, including that infrastructure bonds might be issued to finance tasks with predictable money flows, whereas infrastructure funds can pool capital from a number of traders and allocate it throughout totally different tasks.
“Infrastructure funding trusts provide one other alternative by enabling traders to accumulate items in a professionally managed car that holds income-generating property reminiscent of toll roads, energy transmission services, ports and different infrastructure. Instead of presidency carrying the complete price of constructing and sustaining these property, non-public traders can present capital in change for a share of the earnings generated.
“International experience shows how a sovereign investment institution can help make this model work. India provides a particularly instructive example through its National Investment and Infrastructure Fund (NIIF), a sovereign-anchored investment platform established to mobilize domestic and international capital for infrastructure and other nationally important sectors,” he mentioned.
Citing a number of fashions and examples from India, he famous that the examples have been notably related as a result of Nigeria already has an establishment with a mandate to carry out an identical catalytic function–the Nigeria Sovereign Investment Authority (NSIA), which was established to handle public funding funds and help long-term financial growth, together with the event of home infrastructure.
“Its three core funds embody the Stabilization Fund, the Future Generations Fund and the Nigeria Infrastructure Fund (NIF), with the latter particularly mandated to spend money on Nigerian infrastructure.
“The NIF’s acknowledged funding sectors embody motorways, healthcare, energy and agriculture, amongst others. More importantly, its funding technique already supplies for direct funding in infrastructure tasks and firms, co-investment by way of funding funds, and the creation of establishments that help infrastructure growth.
“This means Nigeria doesn’t essentially want to determine one other government-owned infrastructure fund. A extra sensible strategy could be to strengthen the present Nigeria Infrastructure Fund and place the NSIA as a significant anchor investor, sponsor and catalyst for infrastructure funding automobiles that may elevate extra capital from the market.
“The NSIA might commit a portion of its infrastructure allocation as seed capital to a regulated infrastructure fund or funding belief, whereas inviting pension fund directors, insurance coverage firms, banks, asset managers, worldwide growth finance establishments and different long-term traders to take part.
“Once the vehicle has an appropriate governance structure, a credible pipeline of projects and a clear investment mandate, it could raise additional capital through private placements or public offerings on the Nigerian Exchange, subject to the relevant regulatory requirements.There is also a compelling opportunity to bring ordinary Nigerians into this process,” Uwaleke famous.
