Business
Energy projects: Three ways African governments can better attract private capital
“It is going to take time for us to get into first class contract administration like you have in the First World,” continued Omoboriowo. “But I think, with time, these sorts of regulations, and their actual enforcement, would instill more confidence for investors.”
2. Introducing Competitive Fiscal Incentives
Governments should offer competitive fiscal incentives – such as granting extended periods of tax holidays to investors of substantial projects, particularly renewable energy ventures.
While there is a 5-year tax holiday offered in Nigeria, Omoboriowo noted many of these projects are only viable over a longer period.
“So it may be useful in Nigeria, for example, if the government extended the tax break for a longer period to match internationally acceptable financing terms, like 10 or 20 years or so.”
3. Combining Corporate Social Responsibility and Project Development
Another suggestion would be for governments to incentivise multinational companies to invest part of their corporate social responsibility funds in supporting power projects, either directly or indirectly.
“The private sector has many roles it can play in partnership with the governments, and making it part of corporate social responsibility for large local and foreign companies could provide very good sources of working capital and/or the minimum equity required to attract needed debt capital to finance qualifying power projects.”
An original version of this article was published in How we Made in Africa.
