February 7, 2023

FG invests N613bn Sukuk proceeds on roads, bridges — Finance Minister

Minister of Finance, Budget and National Planning, Zainab Ahmed

As 2022 capital releases hit N1.88trn

By Emma Ujah, Abuja Bureau Chief

The Federal Government has spent N612.557 billion proceeds of Sukuk on critical roads and bridges across the country.

Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, disclosed this at the symbolic cheque presentation ceremony of the 2022 Sovereign Sukuk Issue Proceeds of N130 billion to the implementing ministries in Abuja, yesterday.

She 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.     

“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.

“In real terms, the amount has been 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 and sections of six road projects covering 99 kilometres and 19 bridges by the FCTA.”

Of the N130 billion 2022 Sukuk Issue Proceeds, the FMWH was given N110 billion while the Federal Capital Territory Administration received  N20 billion.

According to her, the 2022 Sovereign Sukuk of N130 billion will be released as part of capital expenditure in the 2022 Appropriation Act, which has been extended by the National Assembly to March 31, 2023.

She said: “As at November 2022, N1.88 trillion had been released as capital expenditure, representing about 40 per cent performance when compared to the total capital budget of N4.7 trillion.

“This informed the need to extend the period to implement the capital component of the 2022 budget.”

Mrs. Ahmed added that beside the immense contributions of Sukuk to the funding of critical road infrastructure, the objectives of deepening the domestic capital market and financial inclusion were being achieved by the government.

She noted that the private sector and sub-nationals had begun to embrace the instrument, adding: “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.”     

In her remarks, Director-General of the Debt Management Office, DMO, Ms. Patience Oniha, said the agency, which issued the first Sukuk in 2017, worked diligently with experts to get the process and documentation right.

She said:  “These efforts paid off with the issuance of the first Sovereign Sukuk of  N100 billion in September, 2017. The DMO has issued Sukuk four more times, bringing the total amount raised as at December 2022 to  N742.56 billion.”

Ms Oniha commended the implementing ministries and their various contractors for supporting the DMO in the initiative, through a transparent utilization of the funds.

She said:  “Through the Sovereign Sukuk initiative, the DMO has demonstrated its strong alignment with the policy of President Muhammadu Buhari on infrastructural development.

“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.”

The Minister of Works and Housing, Mr. Babatunde Fashola, SAN, said that when the administration’s critics condemned it for the high level of debt, they should be shown the infrastructure investment on which the loans were utilised.