FG’s roads: Why Sukuk may not work for you

The administration of President Muhammadu Buhari devised the Islamic Sukuk bond option as one of the ways to finance the infrastructure gap in the land and in 2017; it facilitated the first of such options by securing a N100 billion Sukuk.

It should be a welcomed development seeing an administration attempting practical steps to addressing the nation’s infrastructure gap, notwithstanding that the bonds would add to the nation’s debt burden. The argument is that if foreign loans are devoted to key projects that have capability to repay the loans through direct and indirect economic activities that could amount to wise borrowing.

Thus, the nation was somewhat elated with the announcement from the Debt Management Office that the Sukuk bond was oversubscribed in 2017.  Nigeria got N100 billion Sukuk fund, which was handed over to the Ministry of Works for the purposes road construction and reconstruction.

And we thought that the Sukuk would do the magic and we never really paid attention to the words of the Ministry’s officials as they gave details of the planned disbursement.

Apparently playing on the side of the magical powers of Sukuk, the Assistant Director, Planning and Development, Federal Ministry of Power, Works and Housing, Mr. Danlele Yila, highlighted 25 road projects spread across the six geo-political zones of Nigeria where the N100 billion would be deployed.

Some of the projects include the Loko/Oweto Bridge, dualisation of a section of the Abuja-Lokoja road, dualisation of the Suleja-Minna road as well as the Kano-Maiduguri road.

Others include the dualisation of the Kano/Katsina road (phase 1), rehabilitation of the Onitsha/Enugu Expressway, the Enugu/Port Harcourt road (section 1-3), and the dualisation of the Ibadan/Ilorin road (Oyo/Ogbomoso section).

Even though none of the road projects cost less than N10 billion, we didn’t ask questions as to how N100 billion can go round 25 projects. Much as I can see, the Ministry had programmed the Sukuk to fail or have little or no impact.

If you are in doubt, check out just two of the said projects, the Loko/Owetto Bridge originally awarded at N36 billion by the administration of President Goodluck Jonathan and revised to N51 billion currently as well as the Enugu/Onitsha Expressway rehabilitation initially awarded at N10.3 billion and revised by the Buhari administration to N15.7 billion. If you add the Oyo/Ogbomoso section of the Ibadan/Ilorin Expressway which had N12 billion appropriated to it in the 2017 budget but not executed, the N100 billion Sukuk is almost done.

You just want to wonder why the Federal Government that had saddled itself with the burden of the fight against would allow the balkanisation of borrowed money when it is certain the Nigerian civil service system is yet to be cleaned of the wetin you carry mentality. You want to wonder why the government would choose to divide a bond of N100 billion among 25 projects when in reality the money can only conveniently take care of four or five projects.

It tells you a lot that the way we run government is different from the way we run our lives. Which Director in any of the Ministries would have only N100, 000 in his pocket out of a bill of N150, 000 to be paid on six children and rather than pay off the bills for four of the children and draw IOU on the remaining two, would spread the money to the six schools, thereby owing in all the six fronts.

Don’t get me wrong, the Sukuk Bond is not the problem; the application is the issue. And if a government official thinks the procedure adopted is working, he only needs to move round the ongoing projects. If he is satisfied by tokenism, he would have no qualms. But if we are concerned about the mounting hill of foreign debts we’ve got to pay back as a country and a near misapplication of the borrowed funds, we would be bothered.

We are already seeing the effect of the poor application of the Sukuk. The government announced a while ago that the Loko/Owetto Bridge would be completed in November 2018; we are already at the end of December and no word on that bridge. The Sukuk fixed only 22 kilometres of the over 70 km Enugu/Onitsha Expressway, leaving gullies, craters and forest of overgrown shrubs on both sides of the untouched road. The impact of the Sukuk on the Abuja/Lokoja Expressway is at best mediocre if not fraudulent. Last week, I saw some signposts of Sukuk on sections that were long completed before 2015.

We all know that the Abuja/Lokoja Expressway was some 90 per cent complete under the Jonathan administration. Why would the Ministry of Works not advise the government to devote a substantial part of the Sukuk to complete the road and possibly devote the remainder to other roads?

Though the government, riding on the success of the first Sukuk is already prospecting another, the question would remain, how many Sukuk would you take before you can fix substantial number of roads across Nigeria? The rising debt profile of the administration is already an issue with over N2 trillion going for debt service in the proposed 2019 budget.

Regardless of what the officials would say, the application of the Sukuk money is not yielding the dividends. Nigerians who plied the roads this yuletide season saw it all.


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