The Federal Government has raised the sum of N742.56 billion through Sovereign Sukuk in the past six years, between 2017 and December 2022 for the construction and rehabilitation of key economic road projects in the six geo-political zones and the Federal Capital Territory (FCT).
This was disclosed by the Director General of the Debt Management Office (DMO) Ms Patience Oniha on Monday in Abuja at the symbolic cheque presentation ceremony of 2022 Sovereign Sukuk Issue Proceeds of N130 billion to the implementing Ministries.
According to her, the DMO started the journey towards issuing a Sovereign Sukuk some years back, diligently working with experts to get the process and documentation right, noting that 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 of 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 71 roads and four bridges covering a total of 2,820.06km”, Ms Oniha said.
She commended 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.
Oniha pointed out that through the Sovereign Sukuk initiative, the DMO has demonstrated its strong alignment with the policy of President Muhammadu Buhari, on infrastructural development.
Furthermore, she stated 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.
Ms Oniha reiterated that the DMO remains committed to its mandate and market development activities.
Of the 2022 Sukuk Issue Proceeds of N130 billion, which was successfully issued by the DMO on behalf of the Federal Government of Nigeria on December 02, 2022, the Federal Ministry of Works and Housing (FMWH) got N110 billion and the Federal Capital Territory Administration (FCTA) received N20 billion.
In her remarks, Minister of Finance, Budget and National Planning, Mrs Zainab Shamsuna Ahmed, said 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 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 of November 2022, N1.88 trillion had been released as Capital Expenditure, which represents 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.
“In real terms, the amount has been used to construct and rehabilitate sections of 71 road projects covering 2,808.06 kilometres and 4 bridges by the FMWH and sections of six (6) road projects covering 99 kilometres and 19 bridges by the FCTA”, Ahmed pointed out.
She noted that besides 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.
According to her, the private sector and sub-nationals have begun to embrace the instrument and she hoped to see more issuances in this regard as this will provide additional asset class for the rapidly growing ethical investors and funds in the economy.
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