The federal government has said that it will deploy the N150 billion that would be raised from the ongoing Sukuk bond issuance to the funding of 53 road projects across the country. This is even as it is projected that the total amount raised by the federal government, through Sukuk will soon hit N1 trillion.
Director General of the Debt Management Office (DMO), Ms Patience Oniha who disclosed this at an investors’ forum in Abuja, said the 53 roads cover more than 3,000km.
She explained that the revenue generated through the collection of tolls on the roads would be allocated for the specific purpose of repaying Sukuk.
Sukuk is a non-interest, asset-backed bond that is based on the principles of Islamic finance.
Oniha emphasized that the federal government’s dedication to value-oriented borrowing continues through project-centred Sukuk, leading to the execution of notable road and bridge projects.
According to her, “the government’s optimism in the oversubscription of the Sukuk is based on the fact that the federal government has made significant investments in infrastructure development, through which it has managed to raise a total of N742 billion.
“The massive investment serves as a strong example or evidence of the high level of interest and enthusiasm that investors have shown in Sukuk.
“Infrastructure is an enabler of economic development. Sukuk is one of the strategies for improving infrastructure. The government and people involved believe in the use of Sukuk and plan to continue offering it every year. The hope is that ethical investors will invest in the Sukuk.
“The funds will be used to finance the rehabilitation of road projects and bridges identified by the implementing agencies of the federal government.”
In 2017, when the DMO first introduced Sukuk, the federal government primarily relied on the national annual budget and, to some extent, external borrowings and other government initiatives to fund its investments in roads and bridges.
Recognizing the inadequacy of these sources, the federal government initiated the Sukuk funding program through the Debt Management Office to finance road infrastructure.
The DMO had on October 3 2023, unveiled an opportunity for investors to subscribe to a 10-year Ijarah Sukuk.
This Sukuk offers a competitive interest rate of 15.75 percent per annum, and it is set to mature in October 2033.
The subscription period is billed to last for 9 days running from October 3rd to 11th with the settlement date being October 13th.
In a statement posted on its website, the DMO had said, “Under the local loans (Registered Stock and Securities) Act, CAP. L17, on the authority of the Federal Government of Nigeria FGN road FGN Road Sukuk Company (FGN RSC 1) offers subscriptions through Greenwich Merchant Bank Limited, Stanbic IBTC Capital Limited, and Vetiva Capital Management Limited are authorized to receive applications for N150,000,000,000.00 10-year Ijarah Sukuk due October 2023. Rental rate 15.75% per annum”.
Download Nairametrics App for breaking news and market intelligence.