First Bank: Support for the development of the country’s infrastructure

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First Bank of Nigeria Limited is at the forefront of developing products that support the energy and infrastructure sector in the country. AMAKA IFEAKANDU examines the bank’s efforts to support the power and infrastructure sectors through product development.

Around the world, infrastructure development is a key enabler of productivity and sustainable economic growth. It contributes significantly to human development, poverty reduction and the achievement of the Millennium Development Goals (MDGs).

A recent report showed that investment in infrastructure accounts for more than half of the recent improvement in economic growth in Africa and has the potential to do even more.

For Africa, the need for adequate infrastructure – secure energy, efficient transport, reliable communication systems, resilient sanitation and affordable housing – is particularly apparent and evident.

Undoubtedly, a country’s vast infrastructure deficit is a constraint to its growth, but also an opportunity to move to new and more efficient technologies.

Thus, as a country urbanizes, public goods become easier and cheaper to provide to a more geographically concentrated population.

Government initiatives for infrastructure development

In Nigeria, many initiatives have been launched to stimulate infrastructure development, with varying levels of success. The latest move by the federal government is the establishment of the Infrastructure Corporation of Nigeria (InfraCorp), which aims to raise $36.7 billion for projects and will be spearheaded by some of the best institutions in the country.

InfraCo’rp, established with seed capital of N1 trillion (about $2.6 billion) and was promoted by the Central Bank of Nigeria, Nigerian Sovereign Investment Agency (NSIA) and Africa Finance Corporation (AFC), a multilateral financial institution.

InfraCorp’s mandate is to finance the development of public assets, rehabilitate old assets and construct new ones. The Central Bank of Nigeria has signed a term sheet with InfraCorp and four independent asset managers to develop the country’s infrastructure.

The four independent infrastructure asset managers are Sanlam InfraWorks; Africa Infrastructure Investment Managers (AIIM); AAA Consortium; and Chapel Hill Denham.

The government’s focus is not just on new infrastructure, but on rehabilitating existing assets and completing long-running projects that failed to gain traction under previous governments, including the infamous Mambilla’s famous 3,050 MW hydropower project, stalled for more than 40 years despite significant budget allocations for it over decades, the 11.9 km Second Niger Bridge – now scheduled for completion in 2022 – and the 130 km highway from Lagos to Ibadan.

Another major initiative was the Infrastructure Development Fund (FDIP), launched in 2020 to invest specifically in road and power projects.

Infrastructure in an economy

A country with good quality infrastructure is necessary not only for faster economic growth, but also for ensuring inclusive growth.

Inclusive growth will lead to poverty reduction and reduction of income inequality in the country.

The availability of good quality infrastructure increases productivity levels in the economy and reduces business costs. Furthermore, adequate infrastructure helps to expand trade not only within a country by improving transportation facilities, but also to promote foreign trade through improved ports and airports. It also helps in diversifying the production of the companies as they are able to obtain the necessary supplies of raw materials and other inputs where they are available in abundance.

However, with improved infrastructure, enterprises can produce goods in accordance with the demands of people in different regions and countries.

In addition, the expansion of infrastructure such as irrigation, rural electrification, roads and road transport will promote agricultural growth and the establishment of agro-industrial industries. This general infrastructure will help farmers and owners of processing industries to meet their needs for raw materials, fertilizers and other inputs at low prices and will also help them get their products to markets located in major cities.

For poor farmers, improving infrastructure will reduce the cost of their inputs, increase agricultural production and reduce the monopoly of traders by improving their access to markets. It is a known fact that the majority of farmers today are cut off from national and international markets, due to poor infrastructure and lack of market access.

Better transportation means better access to public resources, including schools, hospitals and other health facilities.” therefore, having adequate infrastructure will ensure sustained employment growth in agriculture and small rural industries and bring prosperity to rural areas and thus ensure inclusive growth. It will also help prevent the mass exodus of rural people to urban areas where they cause problems of urban congestion, growth of slums and acute housing shortages.

First Bank’s support

First Bank of Nigeria Limited, Nigeria’s premier and leading financial services provider, is one of the financial institutions in the country that has the power to support the energy and infrastructure sector in the country. The bank has achieved this through a variety of products and solutions tailored to meet the respective needs of project developers. Some of the products developed by the bank to support the sector include; Corporate or balance sheet finance, project finance, senior debt, subordinated and/or mezzanine debt, bridge finance, financial advisory services, working capital support, acquisition finance, structured trade and commodity finance, bonds and guarantees, financing of intervention funds as well as the financing of imports and exports.

Unlocking the energy and infrastructure sector

Listing its products for financing, FirstBank said unlocking the power and infrastructure sector remains a key driver of economic growth in Nigeria, and supporting this sector remains one of its main objectives and contributions. as a reliable business and financial institution in Nigeria.

The bank supports both the private and public sectors in the creation of new infrastructure and the expansion of existing infrastructure and understands that advising them on project development, innovative investment options and debt solutions will ultimately contribute to deliver a quality result.

As a subsidiary of FBNHoldings, the bank has built a long history of reputation and expertise working with project sponsors in the development of new financing and investment strategies to optimize viability while maximizing returns new projects. The group’s advisory team continued to work with private and institutional investors to review their respective investment plans, translate public and private strategies into defined projects, and help guide projects from concept to preliminary feasibility work, while by providing commercial structuring and financial modelling.

The group remains the reference institution in its ability and capacity to help project promoters and investors to structure, negotiate and execute complex infrastructure investment operations by developing market mechanisms to generate competition for investments and ensuring that competitive tension is present in the negotiation and structuring of all projects benefiting from its support. The bank also provides support to key transport industry sub-sectors – public transport, toll roads and highways, rail and light rail transport, seaport and airport development, pipeline construction and utility services. water, among others.

Main sectors of intervention

And in doing this noble work of helping to facilitate the development of the nation’s comatose infrastructure, the bank is conscious of the planet and the need to pursue an ecological and sustainable approach in its decision-making process, in accordance with the global best practices and sustainable environmental and social business practices, particularly with regard to infrastructure development and power and energy management.

As part of the development of supporting infrastructure, the bank is particularly interested in certain sectors, including electricity generation, transmission and distribution, smart metering systems.

Other areas of focus are renewable energy, transportation, gas transmission, storage and supply, construction, infrastructure components and mining equipment, water and utility services. waste.

Structuring and arrangement solutions

In addition, the bank believes that industry experience is necessary to creatively develop a structured financial solution to deliver complex projects. As a member of First Bank Holdings, First Bank has excellent access to debt and equity capital through local and international capital markets to drive projects through to completion and beyond.

The bank has over 124 years of proven ability to tailor financial products to meet individual stakeholder needs and project requirements with the ability to structure, underwrite and hold large debt positions, which sets the bank apart. and can help improve its customers’ competitiveness and exploit growth opportunities. .

In addition to having long-term advisory support for critical infrastructure projects, it has unlimited access to senior secured corporate loans and mezzanine debt to public-private partnerships and project finance, all by having access to a group of experienced professionals to guide clients in structuring acceptable and bankable projects in the market. .

With the level of support offered by FirstBank in developing the country’s moribund infrastructure, it is hoped that similar organizations will come forward and provide similar support to lift the country out of its current moribund infrastructure.

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