The Nigerian economy has experienced strong growth over the last decade. Between 2010 and 2013, Nigeria achieved a GDP growth of five per cent per annum on the average. This growth is in line with that of other fast-growing emerging markets, and well above the growth rate of some BRICS countries such as Brazil, Russia and South Africa.
Most international organizations project acceleration in this growth for the next few years (over 7 per cent). Assuming that after 2020, GDP growth rate gradually converges to a more moderate (but still ambitious) level of five per cent per annum, the implicit average yearly growth rate for the next 30 years is six per cent.
This six per cent growth trajectory (‘Base’ scenario, constant 2012 prices) would allow Nigeria to reach a GDP of about USD 2.7 trillion by 2043, roughly equivalent to France’s current GDP. Over a 30-year period, Nigeria’s GDP per capita (at 2012 prices) would surge from its current USD 2,797 to about USD 6,750 (assuming a 2043 population of 405 million).
A more ambitious scenario presumes the achievement of Nigeria’s aspirational goals for the continued expansion of the national economy at eight per cent real growth. It should be noted that over the past 40 years, only five countries (Equatorial Guinea, China, Macau, Qatar and Monaco) have been able to grow GDP beyond eight per cent per annum for such a long period of time.
Based on international benchmarks, Nigeria’s “core infrastructure” stock is estimated to be about 20-25 per cent of GDP. This leaves Nigeria with a huge infrastructure gap. If “non-core infrastructure” (social housing, security, mining, agriculture) is included, the gap is even wider.
To fund the infrastructure needs of its growing economy over the next 30 years, Nigeria would need to spend roughly USD 3.0 trillion. This investment would allow Nigeria to close its infrastructure gap both in core asset classes (bringing it to the desired 70 per cent of GDP level) and in other key asset classes. Over the first ten years of the plan, this would require USD 500 billion in investments.
Several previous reports on Nigeria’s infrastructure needed to align with the NIIMP’s perspective on the investment required to improve Nigeria’s infrastructure stock. Most recently (in 2013), the African Development Bank estimated that prior to its GDP rebasing, Nigeria needs to spend USD 350 billion from 2011–20, with USD 300 billion of this investment focused on core infrastructure assets for the transport, power, water and ICT sectors. The African Development Bank analysis does not include security, housing, agriculture, mining and social infrastructure-related assets – all of which are within the scope of the NIIMP.
Similarly, a 2011 World Bank publication (‘Nigeria’s Infrastructure: A Continental Perspective’) assessed that Nigeria needs to increase its spending to USD 14.2 billion per annum over the next decade, reaching a total of USD 142 billion, with USD 10.5 billion per annum needed for federal infrastructure and USD 3.7 billion for state/municipal-level assets. The World Bank estimate is lower than the NIIMP perspective, as the envisaged social and economic targets are not as ambitious as those laid out in the NIIMP. The World Bank analysis also focuses on the ICT, agriculture (irrigation), power, transport and water sectors, and does not include the security, housing, mining and social infrastructure-related assets covered in the NIIMP.
The NIIMP targets have been derived by a combination of top-down and bottom-up approaches. Top-down results have been derived from global research based on international benchmarks and best-practice examples of investment volumes for different infrastructure asset classes.
Bottom-up results have been derived in tight collaboration with the TWGs by defining the strategic priorities for each infrastructure class, defining infrastructure stock indicators for all sectors, then estimating unit costs, and finally projecting future target levels and associated costs for all infrastructure stock indicators. These top-down and bottom-up estimates have been reconciled for the most important sectors in terms of target investment value. Hence, the targets obtained from either assuming a typical ‘target share’ of GDP as infrastructure investment for the sector (top-down), or summing up the costs of the ‘target output’ for each infrastructure stock indicator of this sector (bottom-up) are fairly similar. Targets for Housing and Social Infrastructure have been derived solely by means of the bottom-up approach, since these sectors are quite specific and comprise various idiosyncratic peculiarities for each country. Therefore, a top-down approach is not particularly well-suited for these sectors.