Infrastructure Financing through Islamic

Finance in the Islamic Countries

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ICT sector) is estimated to be at USD 225.54 billion for 2018, USD 1.1 trillion by 2023 and USD

3 trillion by 2043. However, the funds being mobilized through budget, public debt, PPP,

World Bank and Other sources in 2018 for infrastructure finance amount to only USD 26.24

billion. So in 2018 alone, there will be an infrastructure financing gap of about USD 199 billion

and a similar pattern is anticipated over the NIIMP life span.

4.3.3.

National Level Policies and Framework of Infrastructure Development

The Federal Government has been the primary financier of infrastructure projects in Nigeria

and this has been volatile because of unstable budgetary allocation failing to meet the

infrastructure needs of the country. This situation has forced the Government to come up with

some policies to aid infrastructure financing in the country as there is a gradual recognition

that budget allocations may not be the best way to finance and execute infrastructure

development. Therefore, methods for the public and private financing of infrastructure

development in various parts of the world have evolved to meet the emerging priorities and

requirements of infrastructure development (ADB 2013).

It is on this basis that the government of Nigeria inaugurated the Infrastructure Concession

Regulatory Commission (ICRC) in 2005 with a clear mandate to develop the guidelines,

policies, and procurement processes for PPP. The ICRC collaborated with the States to promote

an orderly and harmonized framework for the development of Nigeria’s infrastructure and to

accelerate the development of a market for PPP projects (World Bank 2016). The National

Policy on Public Private Partnership was launched in 2009 to provide a framework for

increasing the participation of the private sector in the economy.

The policy identifies the

steps that the Government should take to increase private investment to reduce the

infrastructure deficit and improve public services in a transparent and sustainable way in

accordance with the best international practices. Furthermore, ICRC issued a Draft PPP Manual

for Nigeria in 2017 that outlines the different aspects of PPP implementation in the country.

The National Planning Commission developed the National Integrated Infrastructure Master

Plan (NIIMP) in 2014. It provides the roadmap for building a world class infrastructure that

will guarantee sustainable economic growth and development and enable the nation to take

advantage of the vast opportunities in the domestic and global economies and enhance the

nation’s competitiveness and improve the quality of life of the citizenry. It provides an

integrated view of infrastructure development in Nigeria with clear linkages across the key

sectors of the economy (NIIMP 2014). NIIMP identified Transport, Energy, ICT and Water as

‘core infrastructure’ and Agriculture, Mining, Social Infrastructure, Housing, Vital Registration

and Security as ‘non-core infrastructure’.

The implementation of the infrastructure master plan would require a total investment of USD

3 trillion over a 30 year period (2014 – 2043) and financing will require both public and

private sector participation. It is against this background that the following strategies for

financing the infrastructure needs of the country are identified:

Government Budgets:

The proportion of the budget allocated for infrastructure financing was

38% of the capital expenditure in 2018 while it will be 29% throughout the remaining NIIMP

period (2019 – 2043) (NIIMP 2014). And with a budgetary capital expenditure of USD 9.4