June 29, (THEWILL) — Nigeria, Africa’s most populous nation and one of its largest economies, stands at a pivotal crossroads. Despite its immense potential to drive regional growth and integrate into the global economy, the country’s infrastructure deficit — estimated at $100 billion annually by the African Development Bank (AfDB) — remains a major obstacle to sustainable development.
From crumbling roads and unreliable power supply to inadequate healthcare and limited digital connectivity, the gaps in infrastructure continue to undermine productivity and discourage both local and foreign investment.
The country’s infrastructure challenges are vast. Nigeria’s road network, crucial for trade and mobility, spans around 195,000 kilometres. Yet over 70 percent of these roads are in poor condition (Federal Ministry of Works, 2023), driving up transportation costs, delaying deliveries, and limiting access to markets, especially for small businesses and farmers.
Nigeria’s rail infrastructure is also limited. Despite recent investments, the country has only 3,500 kilometres of operational track, insufficient for a population exceeding 220 million.
Power generation remains a bottleneck. Installed capacity stands at 12,500 MW, but average output is just 4,000 MW due to transmission losses and gas supply issues (Nigerian Electricity Regulatory Commission, 2024). This leaves Nigeria’s per capita electricity consumption at just 144 kWh annually, far below the global average of 3,131 kWh (World Bank, 2022). Businesses spend an estimated $29 billion yearly on backup energy sources like diesel generators (IFC, 2023).
Healthcare is not spared. With only 0.5 hospital beds per 1,000 people and around 40,000 doctors for a population of over 220 million, Nigeria’s doctor-to-patient ratio stands at 1:5,500 — well above the WHO’s recommended 1:1,000.
The consequences are clear: Nigeria accounts for 14 percent of global maternal deaths despite representing only 2.6 percent of the world’s population (UNICEF, 2023). Digital infrastructure also lags. Only 53 percent of Nigerians have internet access, and broadband penetration is 45 percent, compared to 70 percent in South Africa (Nigerian Communications Commission, 2024). With over 60 percent of Nigeria’s population under 25, this shortfall curtails the potential of its young, tech-savvy population.
This infrastructure deficit presents both a challenge and an opportunity. Private capital mobilisation has worked elsewhere. India’s highway sector attracted $20 billion in private investment between 2018 and 2023, resulting in 50,000 kilometres of new roads. Nigeria has a dynamic private sector and a growing institutional investor base. The potential exists — if systemic barriers are removed.
Institutional assets, including pension and insurance funds, now exceed $100 billion. Yet less than 5 percent is invested in infrastructure, compared to 15 percent in South Africa (AfDB, 2023).
Private equity and venture capital flows to Nigeria reached $1.2 billion in 2023, but little of this was directed to infrastructure (AVCA, 2024). This underinvestment is driven by a trust deficit; policy inconsistency, currency volatility, and weak contract enforcement all weigh heavily.
Several structural and perception-driven barriers stand in the way of investment:
a. Limited data availability: Reliable sector-specific data is often lacking. For instance, poor data on Nigeria’s estimated 14,000 MW solar energy potential (Renewable Energy Master Plan, 2022) makes it difficult to build investor confidence in off-grid solutions.
b. Policy and regulatory uncertainty: Frequent shifts in policy, such as the abrupt 2023 fuel subsidy removal, create unpredictability. Weak legal frameworks and slow contract dispute resolution further dampen interest.
c. Currency volatility:
The 60 percent naira depreciation between 2022 and 2024 erodes the value of infrastructure investments backed by foreign exchange.
d. Delayed disbursements: Development finance institutions like AfDB and IFC disbursed $2.5 billion to Nigeria in 2023, but slow bureaucratic processes often increase project costs and delivery times.
e. Perceived risk: Despite relatively low sovereign default rates, investors remain wary due to governance issues and security concerns, which raise the cost of capital.
To address these barriers and mobilise private capital, several steps are necessary:
Improve data transparency: Government agencies and the Nigeria Sovereign Investment Authority (NSIA) should publish reliable data and conduct feasibility studies — such as exploring the country’s 700,000 MW hydropower potential (NIIMP, 2020) — to build bankable investment pipelines.
Strengthen PPP frameworks: Nigeria currently has 52 active PPP projects valued at $14 billion. Standardised contracts, sovereign guarantees, and effective dispute resolution mechanisms are needed to scale this model.
Derisk investments: Multilateral bodies should expand the use of political risk insurance and partial credit guarantees. NSIA’s Infrastructure Fund, which uses first-loss capital to derisk projects, is a strong template.
Streamline capital disbursement: DFIs and private investors need to balance due diligence with timely disbursement. The delays that plagued AfDB’s $200 million power sector investment in 2024 should be avoided.
Support first-mover projects: Pilot projects, particularly in renewable energy and digital infrastructure, can demonstrate viability and attract follow-on investment. The Katsina Wind Farm $25 million in private capital (Federal Ministry of Power, 2023) is an example.
Stabilise the macro environment: sustained monetary policy, improved FX liquidity, and judicial reform are critical. The Central Bank of Nigeria’s 2024 intervention, which helped reduce naira volatility by 20 percent (CBN, 2024), is a step forward.
Nigeria’s infrastructure deficit is not just a challenge — it is also an investment opportunity. With over $100 billion in domestic assets and rising global interest in Africa, the potential to close this gap is real.
Projects like the $2.8 billion AKK Gas Pipeline (NNPC, 2024), funded through a mix of public and private capital, show what is possible when risk is addressed and project bankability is assured.
To move forward, Nigeria must reset its investment narrative. Infrastructure is more than a development goal — it is the foundation of economic competitiveness. The need to mobilise private capital is urgent, and the window for action is narrowing.
***Written by Teslim Ololade Abass.