Funding the infrastructure gap has been attracting intense investor interest in recent times. Most notably is the modernising, overhauling and expansion of the railway network. The legacy rail system from the pre-independence days was a North-South network designed to evacuate primary products from the hinterland to the colonial masters. The Lagos-Ibadan rail project is worth about $1.5bn, funded by Chinese investors, while the Lagos-Calabar rail network is expected to be financed with a $12bn Chinese loan. The General Electric investment, which is to restore services along the Lagos-Kano and Port Harcourt-Maiduguri axis under a concessionary arrangement, will see GE invest $2bn (CAPEX). In all a total of over $15.5bn (4% of Nigeria’s GDP) is expected to go into a sector that had hitherto been moribund.
According to the International Monetary Fund (IMF), the informal sector in Nigeria accounts for approximately 60% of GDP. Given increased government intervention funds to SMEs, there has been a formalisation of the economy. However, the informal sector has the potential of boosting employment and reducing poverty level. This can only be achieved through effective government policies.
In this edition of the FDC Bi-monthly publication, the FDC Think-Tank analyzes these issues and their implications on businesses and investment decisions.
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