FG Commences N100bn Fresh Borrowing through Sukuk Bond

FG Commences N100bn Fresh Borrowing through Sukuk Bond

By Nume Ekeghe and Sunday Ehigiator

The federal government, through the Debt Management Office (DMO), last Friday announced the commencement of the second phase of the N100 billion, Sukuk bond issuance for infrastructure development.

This, the government said, was as a result of the success of the 2017 Sukuk bond, whereby 25 roads were successfully constructed and rehabilitated across the six geo-political zones, and investors got their dividends as at when due.

Speaking to journalists, the Director General, DMO, Ms. Patience Oniha, said the previous Sukuk bond was a huge success, with a promise of improved benefits for investors in the new debt instrument.

According to her, “Sukuk is just like any other of federal government investment platforms, only that its lifespan is just for seven years. Simply put, federal government has some capital projects on road infrastructure to undertake, but need your investors to fund it and resell to the federal government at completion.

“Sukuk pays a high interest rate of 15.743 per cent upon every investment, and I think it’s the highest return on investment you can ever find on any investment currently in Nigeria.

“It has a zero risk rate, and the returns on investment are tax-free. Sukuk holders can trade the Sukuk on the Nigerian Stock Exchange and FMDQ OTC Securities Exchange, and it qualifies as liquid assets for banks and other institutions.”

Speaking further, she said: “The Sukuk investment certificate may be used as collateral for securing credit facilities from financial institutions, and it likewise provides additional flexibility in asset allocation for all classes of investors.

“We implore the general public and cooperate bodies to invest in this fresh phase of Sukuk. To invest, contact the DMO or the financial advisers to obtain the application form.”

On his part, the Deputy Managing Director, FBN Quest Merchant Bank, One of the financial advisers for instrument, Mr. Taiwo Okeowo, highlighted the benefits those who took part in the last phase derived, adding that, new investors should expect more.

He said: “Those who took part in the last Sukuk have realised that every promise we made, we have delivered on it. In fact, even the federal government is proud to showcase the Sukuk issue as an example of programmes that work.

“It’s a situation where we promised to have money dedicated to specific projects, and we are able to show Nigerians, the project where this money has really made a difference.”

He further added: “And indeed, it’s actually a lot easier because these are known roads, and the sign boards of Sukuk are on each and every of those roads we did in all the geo-political zones in Nigeria, so we all can see it while we drive on them.”

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