Nigeria’s annual electricity generation rose by 19.6% in 11 years, says Coronation

Coronation, an African financial services provider, says Nigeria’s annual electricity generation increased by only 19.6 percent in 11 years – 2010 to 2021.

The Nigerian-based firm disclosed this in its maiden infrastructure report launched on Thursday.

In the report, Coronation described Nigeria’s infrastructure deficit is a “cumulative problem”.

“One demonstration of this is Nigeria’s long-term record of annual electricity generation,” the report reads.

“This rose by just 19.6% over the 11 years from 2010 to 2021, according to data from the National Bureau of Statistics (NBS), or a compound annual growth rate (CAGR) of 1.6%.

“In 2021 annual generation (which excludes amounts generated by diesel units at business and domestic premises) was 36.4 terawatt hours (TWh) per annum.

“A nation with a similar population, Brazil (with 203 million inhabitants), generated 663.0 TWh. A nation with roughly half Nigeria’s population, Egypt (104 million), generated 202.0 TWh.”

Generally, infrastructural deficit has become a crucial aspect of national development discourse, attracting attention from various stakeholders.

According to the reviewed national integrated infrastructure master plan (NIMP), Nigeria needs an investment of $2.3 trillion to close its public infrastructure deficit within 23 years (2020 to 2043).

To achieve this target, $150 billion must be spent annually, the master plan said.

In the 2024 budget, N1.32 trillion was earmarked for infrastructure projects across the country, accounting for 4.83 percent of the budget.

THE NEED FOR PRIVATE CAPITAL

Yet, Coronation believes that the trend in government investment in infrastructure has fallen short over several decades, “something that has created, cumulatively, an enormous deficit as infrastructure fails to meet the country’s needs”.

“The record of the Nigerian government in capital expenditure over several decades underscores the need for increasing private-sector investment,” the report further reads.

“Public expenditure on transportation, education, hospitals, power, housing, and other essential infrastructure has not kept up with the needs of a population growing at a long-term rate of c.2.5% pa.”

Speaking at the report’s launch, Aigbovbioise Aig-Imoukhuede, managing director of Coronation Asset Management, made a case for public-private partnerships (PPPs) as a remedy to the country’s infrastructural gaps, reiterating the company’s position that “Nigeria is ripe for private investment in infrastructure”.

He said despite Nigeria’s rich natural resources, progress has been impacted by inadequate infrastructure, adding that the nation’s transportation, healthcare, and education systems require substantial investment.

“At Coronation, we firmly believe that addressing the infrastructure deficit is not merely a necessity but the strategic imperative. As we all know, infrastructure serves as the backbone of any economy. It enables businesses to thrive, communities to prosper, and individuals to flourish. By investing in infrastructure, we’ll not only create job and stimulate economic activity, but also enhance productivity and efficiency,” Aig-Imoukhuede said.

“In this regard, we see public private partnerships (PPP) as a crucial mechanism for bridging the infrastructure gap. PPPs offer an opportunity to leverage the strengths of both the public and private sectors, utilising private sector capital, expertise and innovation to deliver high quality infrastructure products to stand the test of time.”

On his part, Guy Czartoryski, head of research at Coronation, suggested that higher federal government bond yields could attract private investors, urging the authorities to encourage the education of civil servants in PPPs to avoid contractual issues.

He said the infrastructure report serves as a beacon of knowledge, “guiding stakeholders through the complexities of infrastructure financing across the continent”.