The federal ministry of works and housing, federal capital territory administration (FCTA), and the ministry of Niger Delta affairs, on Thursday, received N250 billion proceeds of the 2021 Sukuk issuance to fund road infrastructure across the six geopolitical zones and the FCT.
The federal ministry of works and housing received N210.565 billion; FCT, N29 billion; while the Niger Delta affairs ministry got N10.435bn cheque.
The Federal Government Sukuk issuance has been progressive, with N612.557 billion raised so far from the four tranches of Sovereign Sukuk since the 2017 debut.
All the series were oversubscribed, which according to Patience Oniha, director-general, Debt Management Office (DMO), demonstrates huge investor confidence in Nigeria’s economy and the Sukuk itself as a viable source of funding for road infrastructure.
“It means that investors believe in the project,” Oniha told BusinessDay after the presentation of symbolic cheques to those three implementing ministries.
The cheques were handed over by Zainab Ahmed, minister of finance, budget and national planning.
The DMO, on behalf of the Federal Government, had in 2017 issued the first tranche of N100 billion and also repeated the same amount in 2018. In 2020, N162.577 billion was received. However, based on all the investor engagements by the Debt Office and the popularity of the product, the government took the decision to expand the offer to N250 billion, which was 346 percent oversubscribed.
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“Going back memory lane, the first time it wasn’t so easy to sell the Sukuk, but now due to the work that we do and what the proceeds are used for, which is about road projects, the instrument continues to get oversubscribed,” Oniha stressed.
“For the N250 billion issued last year, we got 865 billion of subscriptions, but because the Sukuk is part of the domestic borrowing in the budget, we took only the N250 billion in the budget and had to return the other monies to investors, but made sure that each investor had something.”
Speaking earlier at the handover event, Oniha stressed that the introduction of Sukuk as a source of raising funds for the government has improved road infrastructure across the six geo-political zones.
The acceptance of the instrument by investors and the verifiable evidence of its benefits has equally encouraged some state governments and institutions to raise funds through Sukuk Issuance.
“There is so much to say about the impact of the Sovereign Sukuk in terms of contribution to road infrastructure and the development of domestic financial markets. These explain the increase in the size of the amount raised through Sukuk, number of projects covered and the number of implementing ministries over the years.”
She further assured that the funds have been ring-fenced and will be used to finance the designated road projects to deliver results and benefits to the populace
The finance minister, Ahmed said so far, the government has committed, through the ministry of works and housing, some N362.557 billion from 2017 to date to fund key road projects through Sukuk.
But the government decided to incorporate the FCTA and the ministry of Niger Delta affairs due to significant milestones recorded in the use of the proceeds to reconstruct and rehabilitate our road infrastructure
Ahmed said that 2021 N250 billion will be released as part of the Capital Expenditure in the 2021 Appropriation Act, which has been extended by the National Assembly to March 31, 2022.
She also disclosed that t November 2021, N3.40 trillion had been expended for capital, which represents over 74 percent performance when compared to the total Capital Budget of N4.569 trillion.
Out of the N3.40 trillion so released, N2.98 trillion represents 83 percent of the provision for MDAs’ capital, N369.9 billion for multi-lateral/bilateral Project-tied loans, and N49.52 billion as GOEs Capital Expenditure.
Speaking at the event, minister of works and housing, Babatunde Fashola recalled how the government adopted Sukuk as an instrument for funding road projects and the initial cynicism that trailed it.
He assured that all Nigerians will benefit from the proceeds, noting that the N100 billion realized from the first issuance was deployed to 25 roads, which delivered 482 kilometres and created jobs.
Mohammed Bello, the FCT minister assured that they will ensure the projects are delivered on time. He appealed to the contractors to ensure quality job in building the roads and bridges in the FCT.
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