The Federal Government has invested over N612.557 billion raised through Sovereign Sukuk issued between 2017 and 2021 for the construction and rehabilitation of key economic road projects in the six geo-political zones and the Federal Capital Territory (FCT), Zainab Ahmed, minister of minister of finance, budget and national planning, says.
The money was used to construct and rehabilitate sections of 71 road projects covering 2,808.06 km and four bridges by the Federal Ministry of Works and Housing and sections of six road projects covering 99km and 19 bridges by the Federal Capital Territory Administration.
Ahmed spoke on Monday in Abuja at the symbolic cheque presentation ceremony of 2022 Sovereign Sukuk issue proceeds of N130 billion to the Implementing Ministries – including Works and Housing and the Federal Capital Territory.
The issuance of sovereign Sukuk, a project-tied debt instrument, has not been innovative but successful in financing the critical infrastructure in the country.
So far, N742.56 billion has been raised from the five series of Sukuk issued between 2017 and 2022- with N130bn realized from last year’s offer.
Out of this, N100 billion was given to the Federal Ministry of Works and Housing, while the Federal Capital Territory Administration received the N20billion balance, all to be deployed to road projects.
Speaking at the event, finance minister Ahmed said the N130 billion would form part of the federal government’s Capital Expenditure in the 2022 Appropriation Act, which has been extended by the National Assembly to March 31, 2023 due to low implementation recorded so far.
As of November 2022, N1.88 trillion had been released as capital expenditure, which represents about 40 percent performance as against the N4.7 trillion total capital budget.
Ahmed further spoke of how the sukuk initiative has, in five years, helped to improve critical road infrastructure across the country and also helped drive some other objectives including deepening the domestic capital market and financial inclusion.
The private sector and sub-nationals have also begun to embrace the instrument and looked forward to seeing more issuances for additional asset class to rapidly grow ethical investors and funds in the economy.
She commended the DMO and other stakeholders for the sustained success story being recorded through the issuance of Sovereign Sukuk.
Patience Oniha, the director-general of DMO, recalled how the debt office had progressed with Sovereign Sukuk by diligently working with experts to get the process and documentation right.
These efforts, she noted, paid off with the issuance of the first Sovereign Sukuk of N100 billion in September, 2017.
The DMO has issued four more Sukuk instruments, 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 71 roads and four bridges covering a total of 2,820.06km,” she further noted.
She commended the implementing Ministries and their various contractors for supporting the DMO in this initiative.
Read also: FG invests N612bn Sukuk funds on 71 roads, 4 bridges
She said through the Sovereign Sukuk initiative, the DMO has demonstrated its strong alignment with President Buhari’s policy on infrastructural development.
She further stated that the DMO has positioned itself not only as an agency for managing the public debt, 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,” Oniha stressed.
At the event, Raji Fashola, minister of works and housing, also spoke of how Sukuk issuance, over the years, has helped the government build critical infrastructure, sustaining and creating more jobs in the process.
Mohammed Bello, the FCT minister, who received the N20bn cheque for road projects in the capital city and was represented at the event, listed the different roads which have been built with the earlier allocation, and committed to using the new money effectively.
Representatives of the contractors said they were excited to continue with the projects and pledged to deliver in good time.