By Bassey Udo
Minister of Finance, Budget and National Planning, Zainab Ahmed, at the public presentation of dummy Sovereign Sukuk Cheques for the 2022 Sovereign Sukuk Issue Proceeds of N130billion to the Federal Ministry of Works and Housing and Federal Capital Territory Administration (FCTA) for the development of road infrastructure in the country.
She described the Issuance of Sovereign Sukuk, a project-tied debt instrument, as one of the many innovative initiatives of the Buhari administration towards financing the development of critical infrastructure in the country.
“As at 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 geo-political zones and the Federal Capital Territory (FCT),” the Minister said.
Providing more details, the Minister said in real terms, the expenditure was used to construct and rehabilitate sections of 71 road projects, covering 2,808.06 kilometres and four bridges by the Federal Ministry of Works and Housing (FMWH) and sections of six road projects, covering 99 kilometres and 19 bridges by the Federal Government Capital Territory Administration (FCTA).
During the ceremony on Monday, the Minister said the FMWH and FCTA shared the 2022 Sukuk Issue Proceeds of N130 billion issued by the Debt Management Office (DMO) on behalf of the Federal Government on December 02, 2022.
Details of the sharing showed the Federal Ministry of Works and Housing got N130billion and the Federal Capital Territory Administration, N20 billion.
The Minister explained that the 2022 Sovereign Sukuk of N130billion 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.
As at November 2022, she said about N1.88trillion had been released as Capital Expenditure, representing about 40 percent performance when compared to the total Capital Budget of N4.7 trillion.
She said the performance informed the need to extend the period to implement the capital component of the 2022 Budget.
Beside the immense contributions to the funding of critical road infrastructure in the country, the Minister said Sukuk objectives include deepening the domestic capital market and financial inclusion targets achieved by the fovernment.
The private sector and sub-nationals, she said have begun to embrace the instrument, adding that government was looking forward to seeing more issuances of Sukuk, to provide additional asset class for the rapidly growing ethical investors and funds in the economy.
In her welcome remarks, the Director General, and Debt Management Office (DMO), Patience Onihathrough the Sovereign Sukuk initiative, the DMO has demonstrated its strong alignment with the policy of President Muhammadu Buhari administration on infrastructural development.
Also, she said 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, Oniha noted, 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.
Providing the background to the Sukuk initiative, Oniha said the DMO started the journey towards issuing a Sovereign Sukuk some years back, diligently working with experts to get the process and documentation right.
These efforts, she stated, paid off with the issuance of the first Sovereign Sukuk of N100 Billion in September, 2017, and adding that since then, the DMO has issued Sukuk four more times, bringing the total amount raised as at December 2022 to N742.56 Billion.
She however clarified that the Sukuk issued between 2017 and 2021 totalling N612.56billion was raised and deployed to the construction and rehabilitation of sections of 71 roads and four bridges covering a total of 2,820.06km across the country.
While commending the implementing Ministries and their various contractors for supporting the DMO in the Sukuk initiative, Oniha said the N130 Billion 2022 Sovereign Sukuk would similarly be deployed by the two ministries into road projects.
The DMO boss assured that the agency was committed to its mandate and market development activities for the growth of the economy.
