This article is written by Brijesh Devi pursuing a Diploma in M & A from Lawsikho. This article has been edited by Amitabh Ranjan (Associate, LawSikho) and Dipshi Swara (Senior Associate, LawSikho).


One of the main indicators of a developed country is its infrastructure. The infrastructure of a country plays a key role in improving the living standards of its citizens. Developing countries of the Middle East, Asia, and Africa require feasible infrastructural development to make the life of their citizens easier. A properly planned infrastructure helps grow the businesses of corporations and there is a growing trend of developing infrastructure projects through privately financed operations all around the world. Nigeria is one such country that has developed its infrastructure through privately financed projects. The two most popular ways of financing infrastructure projects in Nigeria are by PPP’s (Public-Private Partnerships) and bank-led project finance. This article analyses these infrastructure projects in Nigeria and lays down the legal frameworks dealing with them.    

Understanding infrastructure projects of Nigeria

The developed infrastructure of a country is a sign of the economic growth of the region. The development of road infrastructure in Nigeria isn’t complete but it is far better than the infrastructure it had in the early 2000s. The sub-Saharan African countries have faced economic crises, famine & droughts so the government of these countries couldn’t completely give its attention to such projects. The huge costs associated with infrastructure funding as well as budget deficits are regarded as the chief reasons for the adoption of privately financed infrastructure projects. 

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In February 2021 President Muhammadu Buhari of Nigeria announced that the government has approved the creation of a new development firm called Infra-Co, which will be backed by an infrastructure fund worth $2.63 billion. The hope is to improve the transportation and power networks that have held back the 40% of Nigerians living below the poverty line. The government plans to boost Nigerian infrastructure through a partnership with the private sector.

Analysing bank-led project financing, PPP’s & other privately financed infrastructure projects in Nigeria

Since Nigeria got its independence in 1960 the country’s ruling party had adopted a socialist model to run the nation. However, in recent times with the demand for more infrastructure arising from the population explosion & industrial development along with the financial constraint experienced by the government, the public sector has sought to involve the private sectors in the development of infrastructure facilities through bank-led project finances and joint ventures inform of Public-Private Partnership (PPP). 

Bank-led project finance

Project finance has been embraced in Nigeria as an innovative version for the improvement of public infrastructure and personal project execution. The most lively sectors in nearby venture finance had been transportation, housing, and energy. Examples of key task finance deals encompass the $19 billion Dangote Group refinery task and the US$900 million Azura IPP undertaking for the construction, operation, and maintenance of a 450MW fuel-fired open-cycle electricity plant. However, the adoption of bank-led undertaking finance within the improvement of Nigerian infrastructure has been pretty sluggish, because of a variety of things, together with a dearth of relevant understanding and revel in the undeveloped regulatory framework, and poor macro-financial indices. 

Many of the neighbourhood banks lack the potential to fund large infrastructure tasks, and where they do, can only accomplish that at prohibitive hobby rates. The worldwide investors however are often unwilling to take at the sizable political, financial and different risks, or price them, which regularly puts such investment out of the attainment of tasks. Additionally, over-exposure to overseas loans exposes the initiatives to trade rate dangers, as sales are usually in Naira (the neighbourhood forex). These demanding situations have over time always led to the adoption of impractical financing solutions that cause defaults, prolonged tenors, and deserted tasks.

Public-private partnerships (PPP)

Most governments undertake the PPP model as a rely upon ideological persuasion with the aid of using personal sector know-how to lever extra efficiency and alternate control through the usage of private companies for a powerful approach in enhancing challenge productiveness, then improve monetary growth by way of shifting the greater part of the risk involved in project development to private zone. In the infrastructure projects panorama, PPPs are seen as financial gateways that allow the general public region to utilize private finance capital in a manner that enhances the possibilities of both the government and the private company.

The entire PPP framework in Nigeria hinges on the principles of achieving better value and affordable services. In the National Policy Document (by the Federal Govt of Nigeria), there are economic, social, and environmental objectives for the adoption of the PPP model as a strategy for infrastructure development. The government believes that a private-sector-led drive for infrastructure development through PPPs will open up the infrastructure and service delivery landscape in Nigeria to efficiency, inclusive access, and overall improvement of the quality of public service delivery in a sustainable way. 

Examples of projects that have been or are being financed through this model include the Abuja light rail project, the Lekki Deep Seaport, the second Niger Bridge, and the Onne Oil and Gas Free Trade Zone port facility in Rivers State, which the Financial Times of London describes as “the most successful in Africa”.

Other types of privately financed projects

Capital markets

The above-mentioned ways aren’t the only types of financing for infrastructure projects in Nigeria. The Nigerian capital market has performed notably in terms of bond issuance. The Federal Government’s recent Eurobond provision turned into heavily oversubscribed.

The ARM Harith Infrastructure Fund, the primary infrastructure fund to be authorized by using the Nigerian Securities and Exchange Commission (SEC), is a US$250 million target closed-ended expert Infrastructure Fund with a middle focus on shipping, strength, and utility initiatives in West Africa. Since the status quo of the fund in 2013 (with its first close in January 2015 of circa US$ 90 million), some different infrastructure price ranges were registered to utilize the SEC (including the NSIA’s Nigerian Infrastructure Fund). No infrastructure fund (or bond) has but been listed on any trade-in Nigeria. Likely reasons for this consist of lack of stable macroeconomic surroundings, loss of a strong company base/ bankable tasks, and market illiquidity.


Islamic finance is a way of financing primarily based on the standards of Islamic regulation and has numerous systems that can be adapted to healthy various ways of financing depending on the instances together with Murabaha, Takaful, Ijarah, Wakala, and many others. It has been instrumental within the finance of several initiatives around the phrase, together with the UK, South Africa (which was about 4 instances oversubscribed), Senegal, and Malaysia. The SEC in 2013, promulgated rules on Sukuk issuance which facilitated the issuance of the first State Sukuk in Nigeria by using the Osun State Government. The issuance became an N14.4 Billion bond for the purpose of financing street, and school constructions throughout the kingdom. Islamic financing is a hitherto untapped deep fund pool, and it’s far crucial to make certain that the improvement of the regulatory framework surrounding the same is obvious and in line with contemporary international practice, to draw vital investment.

Pension Fund Assets

The National Pension Commission Regulations on Investment of Pension Fund Assets allow Pension Fund Administrators (PFAs) to invest Pension Fund Assets (PAs) under management in infrastructure initiatives via eligible bonds and different debt securities. The proposed infrastructure challenge must meet positive additional criteria, along with, inter alia, the project needs to not be much less than N5 Billion in value and should be offered to a concessionaire with an excellent track document through an open and aggressive bidding process following requirements beneath the ICRC Act, be licensed by using the ICRC and approved by using the Federal Executive Council. In addition, the bond ought to have suitable credit score upgrades.

However, although the guidelines allow as a good deal as 20% of the overall price of PAs under control to be invested in infrastructure, PFAs in Nigeria presently allocate simplest about 1% in their portfolios to investment in infrastructure, as many projects are unable to meet the investment standards because of lack of inexpensive credit score enhancements, and bureaucratic bottleneck worried in acquiring applicable certifications (now and then those can take years, hence driving up pre-development costs notably).

There is also no provision for pooling of PAs to create an extraordinary fund that might be capable of financing infrastructure at cheaper quotes due to the blessings of pooling.

Key regulatory frameworks for legal governance of Nigeria’s infrastructure projects

Below are some key regulatory frameworks meant for Nigeria’s infrastructure projects:

Highways Act 1971

The Ministry of Transport has been empowered by The Highways Act to operate and construct toll gates to collect tolls on the country’s highways. The main infrastructure law, the ICRCA, no longer contains a saving provision concerning this piece of regulation, nor does it make a connection with the Highways Act.

Utilities Charges Commission Act 1992

The Utilities Charges Commission was established under the Utilities Charges Commission Act 1992 that regulates tariffs levied by public utilities in the country. The main task of the commission is fixing the tariffs between the private investor and the government.

Bureau of Public Enterprises (Privatisation and Commercialisation) Act 1999

This act has laid down a complete regulatory framework network for privatization schemes in Nigeria and established the National Council on Privatisation (NCP) along with the Bureau of Public Enterprises (BPE) as the monitoring authority for private transactions. Under this act, the NCP is responsible for determining the public assets the government should divest from.

Debt Management Office

The main aim of the Debt Management Office (Establishment, Etc) is to authorize all loans and borrowings of the Federal Government and empowers the Minister of Finance to give guarantees for such borrowings and to approve loans from financial institutions to the Federal, State, or Local Governments or any of their agencies. Since all PPP processes may involve Federal Government borrowings and guarantees and other long-term contingent liabilities, under section 6 of the Act, the DMO’s approval will be required.

Electric Power Sector Reforms Act, 2005

This Act lays down the framework for compulsory participation of private companies in the generation, transmission, and distribution of power(electricity). 

Infrastructure Concession Regulatory Commission Act 2005

The Infrastructure Concession Regulatory Commission Act, 2005 (ICRCA) was signed into law on 10 November 2005. The Act grants for the participation of the non-public region in financing the development, development, operation, or maintenance of infrastructure or improvement projects of the Federal Government through concession or contractual arrangements; and the establishment of the Commission to alter, screen and supervise the contracts on infrastructure or development initiatives.

Public Procurement Act 2007

The Public Procurement Act 2007 (PPA) installed the National Council on Public Procurement and the Bureau Public Procurement (BPP) as the regulatory government chargeable for the monitoring and oversight of public procurement, harmonizing the present government guidelines and practices by regulating, placing standards, and growing the felony framework and professional ability for public procurement in Nigeria, and other related matters. 

It applies to all varieties of procurement of products, works and services finished via the Federal Government of Nigeria and all “procuring groups” and all other entities which derive at the least 35% of the finances appropriated, or proposed to be appropriated, for any type of procurement from the Federal proportion of the finances.

This list mentioned above is not exhaustive. The countries’ taxation laws are also obviously triggered during project finance & PPP transactions.


Infrastructure remains a key factor for an economically thriving country. Proper infrastructure planning improves the living quality of the residents and allows ease of business. Nigeria is still going through a discovery phase so far as PPP is concerned, while the environment in South Africa is comparatively advanced. This article describes how the legal framework operates and lays down the regulatory framework for infrastructure management and highlights areas where to improve on their local practice for PPP and project finance. 


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