The Association of Corporate Trustees (ACT) is advocating for comprehensive legal reforms to expand the role of corporate trustees in Nigeria’s infrastructure financing landscape.
Omolola Iyinolakan, President of the ACT, stated that the current legal framework governing trusteeship requires urgent updates to enable trustees to play a more strategic role in mobilizing capital for critical national projects.
The call for reform comes as Nigeria seeks more efficient ways to close its massive infrastructure deficit, which continues to hinder economic growth across the transport, energy, and healthcare sectors.
Iyinolakan argued that repositioning trusteeship is essential for increasing the transparency and security of funds earmarked for large-scale projects. According to the ACT, updated laws would allow trustees to move beyond passive administration into more active roles in managing the complex financial structures required for modern infrastructure.
Under the current system, corporate trustees primarily act as intermediaries who hold assets and ensure that the terms of a trust deed are met. However, the association believes that with legislative support, trustees could provide stronger safeguards for institutional investors, particularly in the issuance of infrastructure bonds.
The proposed reforms aim to align Nigerian trusteeship laws with international best practices, making the domestic market more attractive to foreign direct investment. By strengthening the legal protections afforded to bondholders and beneficiaries, Nigeria can reduce the perceived risk associated with long-term infrastructure assets.
Strengthening Institutional Trust for Infrastructure Growth
Infrastructure projects in Nigeria often rely on Securities and Exchange Commission (SEC) approved instruments, including corporate bonds and project-specific notes. The ACT suggests that a more robust legal mandate would allow trustees to exercise greater oversight over the utilization of these funds, preventing the diversion of capital from intended projects.
The association highlighted that the current laws are outdated and do not fully account for the intricacies of public-private partnerships (PPPs) and the sophisticated requirements of global pension funds and insurance companies.
For these institutional investors to commit significant capital to Nigerian roads, rail, and power projects, they require a level of fiduciary certainty that only a modern, legally backed trust framework can provide. This includes clearer rules on the liability of trustees and expanded powers to intervene when project milestones are not met.
The push for reform aligns with broader efforts by the Nigerian government to diversify funding sources away from direct budgetary allocations. The BusinessDay report indicates that the ACT intends to engage more deeply with regulators to ensure that trusteeship becomes a catalyst for financial stability in the infrastructure sector.
Industry analysts note that the role of the trustee is critical in mitigating the “agency problem” where the interests of project promoters may diverge from those of the investors. A legally empowered trustee acts as the primary shield for the investor, ensuring that cash flows are managed strictly according to the agreement.
The ACT is expected to present a detailed framework of proposed amendments to the relevant regulatory bodies and the National Assembly. These proposals are likely to focus on updating the Trustees Act and enhancing the guidelines issued by the Central Bank of Nigeria and the SEC regarding fiduciary responsibilities.
The outcome of these legal adjustments will determine whether Nigeria can effectively leverage its domestic capital market to fund the multi-trillion naira infrastructure requirements identified in the National Development Plan.
The next phase of this initiative involves formal consultations between the ACT and the federal government to determine the timeline for legislative review and the implementation of new regulatory standards.
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