Investment in infrastructural development up by 85.3%

THE Central Bank of Nigeria has disclosed that sectoral credit utilisation and loans by money deposit banks in Nigeria (DMBs) to infrastructure has increased from N363.7 billion to N1, 629 billion.

This, according to the CBN Governor, Mr. Sanusi Lamido Sanusi, at a recent forum in Lagos, was an indication that total credit by banks to the infrastructural sector grew astronomically by  85.3 per cent.

Sanusi, who was represented at the forum by the Deputy Governor in charge of Corporate Services, Mr. Sulaiman Barau, stated that available information showed that the banking sector reforms had positive impact in engendering infrastructural financing.

Specifically, he said sub-sectoral analysis showed that transport and communication obtained over 50 per cent of the credit extended by “the low credit to the public utilities can be attributed to the dominance of government investments over time in the sub-sector, as banks find it very unprofitable to invest in due to the inherent risks associated with financing such projects.” he said.

The decline, according to him, could be attributed to the global financial crisis and the banking sector reforms undertaken by the monetary authorities, while the share of building and construction of the total sectoral credit granted by DMBs averaged 5.9 per cent during the period 2006-2008 and increased to 8.1 per cent , with the share of credit to public utilities in the sectoral credit granted by DMBs.

“Infrastructure plays an important role in growth performance of any economy. The development and maintenance of essential public infrastructure is a critical ingredient for sustained economic growth and poverty reduction. Poor infrastructure is perhaps the most binding constraint to growth among emerging nations,” he lamented.

Again, he noted that another issue was lack of sufficient domestic terms of financing, stressing that finance was critical to developing infrastructure not only for the usual reason of allocative efficiency, but also because of the distinctive economic characteristics of infrastructure.

Source : Tribune