By Abraham Olatunbosun
The Federal Government has raised a loan of N130 billion to build infrastructure across the country.
The fund, a 2022 Sovereign Sukuk Issue Proceeds, is to be expended by both Ministry of Work (N120 billion) and the Ministry of Federal Capital Territory Administration (N10 billion) to build roads.
Presenting the dummy cheques to the Ministers of Works (Babatunde Fashola) and Minister of FCTA (Mohammed Bello, who was represented by a permanent secretary in the Ministry, Adesola Olusade), the Minister of Finance, Budget and National Planning, Dr. Zainab Shamsuna Ahmed, said the fund is for development of road infrastructure.
She said: “It is my pleasure to welcome you all to yet another historic day in the life of this administration to witness the public presentation of dummy Sovereign Sukuk Cheques to the Federal Ministry of Works and Housing and Federal Capital Territory Administration (FCTA)
“I am proud to say that the Issuance of Sovereign Sukuk, a project-tied debt instrument, is one of the many innovative and very successful initiatives of this administration towards financing the development of critical infrastructure in the country. The facts on how much the initiative has helped to improve road infrastructure across the country speak for themselves.”
Ahmed disclosed that: “As at date, this administration has invested the sum of N612.557 billion raised through Sovereign Sukuk between 2017 and 2021 for the construction and rehabilitation of key economic road projects in the six (6) geo-political zones and the Federal Capital Territory (FCT). In real terms, the amount has been used to construct and rehabilitate sections of 71 road projects covering 2,808.06 kilometers and 4 bridges by the FMWH and sections of six (6) road projects covering 99 kilometers and 19 bridges by the FCTA.”
She added that: “The FMWH and FCTA will be sharing the 2022 Sukuk Issue Proceeds of N130 billion, which was successfully issued by the Debt Management Office (DMO) on behalf of the Federal Government of Nigeria (FGN) on December 02, 2022.”
She noted that: “The 2022 Sovereign Sukuk of N130 billion will be released as part of the Capital Expenditure in the 2022 Appropriation Act, which has been extended by the National Assembly to March 31, 2023. As at November 2022, N1.88 trillion had been released as Capital Expenditure, which represents about 40% performance when compared to the total Capital Budget of N4.7 trillion. This informed the need to extend the period to implement the capital component of the 2022 Budget.”
“It is important to add that beside the immense contributions of Sukuk to the funding of critical road infrastructure, the objectives of deepening the domestic capital market and financial inclusion are being achieved by the Government. The private sector and sub-nationals have begun to embrace the instrument and I look forward to seeing more issuances in this regard as this will provide additional asset class for the rapidly growing ethical investors and funds in the economy,” the Minister added.
On her part, the Director-General of the Debt Management Office, Ms. Patience Oniha said since the introduction of the scheme, an effort which led to the issuance of the first Sovereign Sukuk of N100 Billion in September, 2017, the DMO has issued Sukuk four more times bringing the total amount raised as at December 2022 to N742.56 billion.
She said: “From the Sukuk issued between 2017 and 2021, a total of N612.56 Billion was raised and deployed to the construction and rehabilitation of sections of seventy-one (71) roads and four (4) bridges covering a total of 2,820.06km. I wish to commend the implementing Ministries and their various contractors for supporting the DMO in this initiative. Not surprisingly, the two (2) Ministries are also beneficiaries of the N130 Billion 2022 Sovereign Sukuk, whose proceeds will be similarly deployed to road projects.”
She noted that: “The Debt Management Office (DMO) started the journey towards issuing a Sovereign Sukuk some years back, diligently working with experts to get the process and documentation right.
Through the Sovereign Sukuk initiative, the DMO has demonstrated its strong alignment with the policy of President Muhammadu Buhari, on infrastructural development.
“Furthermore, the DMO has positioned itself not only as an agency for managing the public debt including borrowing on behalf of the Federal Government, but as an active stakeholder in the domestic capital market through innovation, investor engagement and collaboration with other stakeholders. These have deepened the market, created benchmarks for other borrowers and promoted financial inclusion by providing a retail product, FGN Savings Bond, as well as, Sukuk and Green Bonds for ethical investors.”
She said that the DMO remained committed to its mandate and market development activities.
The Minister of Works said the nation though now complaining about the debt burden would be grateful in coming years on the assets which were acquired.
He said the roads constructed with the debt have added to improving the economy with creation of more jobs and improving the income of stakeholders.
