In early 2021 the government launched a slate of major projects to help bridge Nigeria’s infrastructure gap. In support of this, the country’s leaders created the Infrastructure Corporation of Nigeria, or InfraCorp, in February of that year: a public-private fund to finance critical infrastructure such as railways and roads. The construction sector is expected to be a significant growth driver for the economy over the next few years, underscored by the 2021 budget allocation of N3.9trn ($10.4bn) for capital expenditure, up 43% on the proposed 2020 amount.
As part of the infrastructure push, the government unveiled a number of big-ticket rail projects in the first quarter of 2021. In February work began on a $1.8bn internationally funded rail line linking the country’s north to neighbouring Niger, which is set to boost commerce and help establish Nigeria as an export centre. Notably, construction is being carried out by Portuguese company Mota-Engil. It is the first rail project in the region not executed by Chinese construction firms and banks, instead relying on financing from Europe.
The following month the $3bn rehabilitation and reconstruction of the 1443-km eastern rail line linking Port Harcourt and Maiduguri was launched. Upon completion, the route will connect industrial and agriculture areas around the country, facilitating the movement of people, goods and services. The federal government is expected to cover 15% of the costs, with the remainder financed by Chinese investors. Work is being carried out by China Civil Engineering Construction Corporation. The project is expected to significantly raise intra-national trade and benefit local farmers by reducing transport costs for goods, in turn helping them scale up production due to enhanced market access. Building on the rail project, a $461.9m port and a $241.1m industrial park will be constructed in Bonny and Port Harcourt, respectively, through public-private partnerships.
In March 2021 the Federal Ministry of Works and Housing (FMWH) launched the Highway Development Management Initiative (HDMI), which will drive construction activity, boost the role of the private sector, and create 50,000 direct and 200,000 indirect jobs. The initiative will have an initial capital investment of N1.1trn ($2.9bn). The same month the government began the procurement process to allow individuals and private companies to bid for the management of 12 federal roads across Nigeria’s six geopolitical zones. Investors will be able to bid in the two categories of the HDMI, namely the value-added concession (VAC) and unbundled assets approvals (UAAs), through an online portal. UAAs allow small businesses to leverage commercial opportunities along the artery, while the VAC involves the development and management of the road. The first phase of the VAC will cover 12 roads totalling nearly 1964 km. This accounts for 5.6% of the total federal road network, which covers 35,000 km.
Power projects are also driving construction activity. In September 2020 the government announced it had secured $6.15bn for energy development. German multinational Siemens accounted for $2.3bn of this figure through an agreement to expand electricity capacity to 25,000 MW by 2025. In late February 2021 the company signed a contract for the pre-engineering stage of the Presidential Power Initiative. The programme consists of three phases that are to see electricity capacity raised to 7000 MW, 11,000 MW and 25,000 MW, respectively. Meanwhile, $1.7bn of financing came from the World Bank, the African Development Bank (AfDB) and the Japan International Cooperation Agency for distribution improvements; $1.6bn from donor agencies for the Transmission Rehabilitation and Expansion Programme; and $550m from the World Bank and AfDB for the Nigeria Electrification Project, an initiative that aims to link rural communities to the grid.
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