By PETER EGWUATU

The Debt Management Office,DMO, has revealed that the Federal Government will soon come out with modalities for alternative financing in order to reduce borrowing from both internal and external sources.

Director General, DMO, Dr. Abraham Nwankwo, who revealed this said, “Government is already working on alternative financing sources and generally the non-interest financing products including the Sukuk.

According to him, “Just recently, there was a workshop in Abuja organised by the Africa Development Bank, ADB, which involved other African countries and we deliberated on how to go forward. So Nigeria is seriously working on establishing the necessary frameworks for tapping into alternative sources of funding; including Sukuk like I mentioned earlier. Nigeria is going to take advantage of all available and appropriate sources.

At the Abuja forum, I did say that it should not be taken that development alternative financing should be restricted to government just as in the conventional debt instruments whereby we are encouraging the private sector to take advantage. We are also for the non-interest financing, including Sukuk, while encouraging the private sector to play the lead role. It’s not for government to start issuing sovereign Sukuks, at the appropriate time, they will do that. The private sector should understand this new financing alternative so they could take advantage of this.”

When asked  if there is a possibility of providing enhancement for Nigerian corporates, Nwankwo said,  “There are various credit enhancement that are already in place, for instance, the partial risk guaranty offered by the World Bank Group and this usually comes through the Ministry of Finance. I’m aware there are a couple of projects seeking funding through this alternative.

There are arrangements in place if some foreign investors, possibly in collaboration with Nigerian partners, want to invest in the country, and they need some form of political guaranty, that can be assessed from the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group.”

Continuing, he said, “Let me also mention that something related to that is the fact that the Minister of Finance has made known on a number of occasions that before the year ends, government would have established the mortgage liquidity facility which is to help the private sector be able to fund mortgages.”