ABSTRACT
Chapter 11 discusses the benefits and risks of project and infrastructure financing. The chapter takes stock of the status of infrastructure development in Nigeria. Nigeria’s “core infrastructure” stock is estimated to be about a quarter of gross domestic product, three times lower than international benchmarks. To close its core infrastructure gap, Nigeria would need to spend about $3.0 trillion over the next 30 years. In spite of huge infrastructure gaps, project finance is still in its infancy in Nigeria due to limited maturity tenor of loans from local banks and narrow base of investors in infrastructure projects. There are, however, notable infrastructure projects in the telecom, power and road sectors that have used project financing mechanisms in Nigeria. The liquidity maturity mismatch of local banks and pressure on government fiscal budgetary resources have led to the search for alternative sources of infrastructure project financing. Market-based financing and private-sector financiers as parties to project finance are now being explored and tapped into. In recent years, sukuk bonds, green bonds and project bonds have been issued to finance infrastructure projects in Nigeria.
