FG Raised N742.56bn Sukuk Funds to Finance Road Projects in Six Years

•Puts 2022 capital budget performance at N1.88trn

Ndubuisi Francis in Abuja

The federal government, has so far raised a total of N742.56 billion through Sovereign Sukuk to finance road projects across the six geo-political zones in the country between 2017 and 2022.

Sukuk is a fixed-income capital market instrument issued by the Debt Management Office (DMO) on behalf of the federal government to raise funds to finance road projects in the country.

Speaking in Abuja, yesterday, at the cheque presentation ceremony of the N130 billion raised from the 2022 Sukuk issuance, the DMO Director General, Ms. Patience Oniha, recalled the trajectory of the Islamic-styled bond since 2017.

She said: “The DMO started the journey towards issuing a Sovereign Sukuk some years back, diligently working with experts to get the process and documentation right.

“These efforts paid off with 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.

“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 bridges covering a total of 2,820.06km.”

She commended the implementing ministries and their various contractors for supporting the DMO in the initiative.

She stated that it was not surprising that the Ministry of Works and Housing as well as the Federal Capital Territory Administration (FCTA) were also beneficiaries of the N130 billion 2022 Sovereign Sukuk, whose proceeds will be similarly deployed to road projects.  

According to her, through the Sovereign Sukuk initiative, the DMO had demonstrated its strong alignment with the policy of President Muhammadu Buhari, on infrastructural development.

Oniha stressed that 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, she stressed, 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.

According to her, the DMO remains committed to its mandate and market development activities. 

In her remarks, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed noted 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.”

Ahmed pointed out that the Buhari’s administration had invested the sum of N612.557 billion raised through Sovereign Sukuk between 2017 and 2021, into the construction and rehabilitation of key economic road projects in the six geo-political zones and the Federal Capital Territory (FCT).

The minister disclosed that the N130 billion raised from the 2022 Sukuk FMWH and FCTA was shared between the Federal Ministry of Works and Housing, which got N110 billion, while the FCTA received N20 billion.

According to her, the N130 billion Sukuk fund would be released as part of the capital expenditure in the 2022 Appropriation Act, which had been extended by the National Assembly to March 31, 2023.

Ahmed also disclosed that as at November 2022, N1.88 trillion had been released as capital expenditure, representing about 40 per cent 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 said.

Ahmed thanked the DMO and all those  who contributed in one way or the other for the sustained success story being recorded through the issuance of Sovereign Sukuk

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