This was disclosed in the agency’s first report on the Nigerian infrastructure market obtained on Sunday.
According to the report, weak institutions and governance frameworks along with a low tax base are hindering infrastructure investment, while financially strained utilities are unable to invest in improvements.
Commenting, the Vice President, Senior Analyst at Moody’s Investors Service, Kunal Govindia, noted that the country had an infrastructure deficit, facing additional pressures from a rapidly growing population.
“Its low government funding capacity and customer affordability has been weakened further by the COVID-19 pandemic and low oil prices,” he said.
The report noted that the focus of infrastructure development had been within power, railways, roads, ports, and pipelines, adding that the trend was expected to continue with particular investment needed to address Nigeria’s electricity shortages.
“To this effect, Nigeria’s power sector could benefit from renewable energy like solar and wind, with financing also possible from green bonds,” it said.
Also highlighting the budget constraints facing the country, the rating agency noted that addressing this shortfall would require financing from the private sector, multilateral development institutions and other non-state investors.
“Financial guarantors, multilateral development banks and local institutional investors will be important in helping finance infrastructure development,” it said.
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