To realize its ambitious infrastructure projects, the state is partnering the financial sector as well as reputable infrastructure developers to evolve an innovative and cost-efficient mechanism of funding the projects.
This innovative mechanism, popularly tagged, Osun Financial Re-engineering has allowed the state to concurrently execute multiple strategic projects, a development that is unprecedented in the state’s history.
Financial re-engineering has allowed the state, to literarily, Build Now and Pay over time. For a number of the projects being implemented, the mechanism allows the State to leverage on its revenues projections in the mid term to spread payments for infrastructure payment over periods of 24-36 months.
This mechanism delivers the benefits of
- Optimum Revenue leverage, as the State can execute projects in the present, but pay based on it projected revenue over a three-year period.
- Early Return on Investments, as most projects will be delivered and start to render services, before repayment is completed.
- Inflation Proof Cost, as the cost of commissioning and executing projects in the present, would be devoid of inflation costs of executing same project in the future.
The financial re-engineering mechanism being pioneered by the state of Osun is a novel means for Infrastructure Financing within the Nigerian public sector. This has won the state commendations from the finance industry, like that of the Nigerian Infrastructure Bank PLC.