Nigerian Roads, Bridges Gulp N613bn Sukuk Proceeds – FG

• As 2022 capital releases hit N1.88trn mark in Nov
• DMO lauds Ministries, contractors for transparent funds’ utilization

BY COBHAM NSA – Revelling that the Sukuk initiative has helped to improve Nigeria’s road infrastructure over the years, the Federal Government on Monday disclosed spending about N612.557 billion proceeds of Sukuk on critical roads and bridges across the country.

According to the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed; “As of date, this administration has invested the sum of N612.557 billion raised through Sovereign Sukuk between 2017 and 2021 for the construction and rehabilitation of key economic road projects in the six (6) geo-political zones and the Federal Capital Territory (FCT).”

Speaking at the Symbolic Cheque Presentation Ceremony of the 2022 Sovereign Sukuk Issue Proceeds of N130 Billion to the Implementing Ministries in Abuja, Mrs Ahmed stated that; “In real terms, the amount has been used to construct and rehabilitate sections of 71 road projects covering 2,808.06 kilometers and four (4) bridges by the FMWH (Federal Ministry of Works and Housing) and sections of six (6) road projects covering 99 kilometers and 19 bridges by the FCTA.”

She explained that of the N130 billion 2022 Sukuk Issue Proceeds, the sum of N110 billion went to the FMWH while the Federal Capital Territory Administration (FCTA) got the balance of N20 billion.

Further highlighting the government’s appreciation of the Sukuk initiative, the Minister said; “I am proud to say 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 facts on how much the initiative has helped to improve road infrastructure across the country speak for themselves.

Mrs Ahmed also said the 2022 Sovereign Sukuk of N130 billion would 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, adding; “As of November 2022, N1.88 trillion had been released as Capital Expenditure, representing about 40% performance when compared to the total Capital Budget of N4.7 trillion.”

Explaining that the government’s resolve to up its budget execution ante informed the need to extend the period to implement the capital component of the 2022 Budget, the Minister said aside from the huge contributions of Sukuk in funding critical road infrastructure, the government has achieved its set objectives of deepening the domestic capital market and financial inclusion.

On the positive response by the private sector and sub-nationals in accepting the instrument, she said; “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.”

Also speaking at the ceremony, the Director-General, Debt Management Office (DMO), Ms. Patience Oniha, said they had to work diligently with experts to get the process and documentation right, adding; “These efforts paid off with the issuance of the first Sovereign Sukuk of N100 billion in September 2017.”

She further stated that; “The DMO has issued Sukuk four (4) more times bringing the total amount raised as of December 2022 to N742.56 Billion”, and lauded the implementing Ministries and their various contractors for backing DMO in the initiative with their transparent utilization of the allocated funds.

Maintaining that DMO has demonstrated strong alignment with the present administration’s policy on infrastructural development through the Sovereign Sukuk initiative, Ms Oniha said; “Furthermore, 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 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. The DMO remains committed to its mandate and market development activities.”

For the Minister of Works and Housing, Mr Babatunde Fashola (SAN), the massive infrastructure investments that gulped the loans accessed by the government should serve as the selling points in silencing critics over the so-called high level of debt incurred by the country in the last eight years of the President Buhari-led administartion.