The government could also employ alternative sources of public investments to finance the required infrastructure investments. For example, over the next five years, USD 8 billion is potentially available from the Sovereign Wealth Fund (assuming the fund grows in size significantly and continues to allocate 32.5 per cent of its assets to infrastructure financing) and USD 5 billion could potentially be sourced from public pension funds (assuming continued growth and a 20 per cent allocation to infrastructure as per the 2012 regulation on investment of pension fund assets).
It is important to note, however, that in the first few years the SWF may not provide a significant amount of financing given the magnitude of spend required. In its first year, the fund will only start with USD 1 billion, with USD 325 million allocated for infrastructure investments. The SWF is also subject to global oil price fluctuations as the amount available is dependent on the surplus generated from Nigeria’s oil revenues; hence it may not provide a constant source of financing for infrastructure projects.
Employing public pension funds may be risky and highly political due to the public nature of this financing source. Though the potential exists for the funds to be invested in infrastructure (up to 20 per cent of the public pension fund can be allocated to infrastructure), no such investments have yet been made.
Investments made from these funds should only be in assets with a clear positive business case, to ensure that funds generate a return on the investments.