Lagos State Government has said that it is planning to transfer the management of some of its assets to private investors to enable it to invest in other critical areas of the economy.
The Deputy Governor of the state, Obafemi Hamzat, disclosed recently when he received the leadership of the Lagos Chamber of Commerce and Industry in his office.
According to the deputy governor, the state government understands that the private sector is the major driver of any nation or state economy and as such, it is the responsibility of the government to make them strive and create an enabling environment.
He also said the state government was already doing a lot in terms of attracting investors because no government could do everything on its own.
Hazat’s comments come in the wake of a recent World Bank advisory for governments to leverage asset recycling to raise funds for developmental purposes.
In a new report titled ‘Why countries should implement asset recycling, and where to get good guidance,’ the global lender said governments could leverage existing, aging infrastructure to raise funds for new development.
Asset recycling allows governments to concession out or lease existing, brownfield infrastructure assets, such as toll roads, airports, ports, rail, and electricity transmission assets that have the potential for private sector efficiencies in their operations and maintenance.
Governments, in turn, can invest the realised proceeds into building new, sustainable greenfield infrastructure assets.
This creates a virtuous cycle whereby the public accesses improved services provided by the private sector (operating existing assets) and benefits from additional services delivered by investment in new infrastructure assets.
According to the World Bank, asset recycling can help meet infrastructure investment needs and gaps, alleviate constraints in raising finance and funds and leverage private sector efficiencies for better service delivery of existing infrastructure assets.
The report read in part, “To meet this ambitious target, the government of India is seeking large-scale infrastructure investment, with asset recycling —or monetisation of existing infrastructure assets—as a key pillar of sustainable infrastructure financing.
“The government’s National Monetisation Pipeline, backed by a comprehensive framework developed by the Ministry of Finance, NITI Aayog (a government policy think-tank), and other relevant ministries, aims to generate $72.8bn by leasing out public infrastructure assets between 2022 and 2025.”
