FG expends N742.56bn Sukuk funds on roads, releases N1.88trn for 2022 expenditure

The Federal Government has raised N742.56 billion sovereign sukuk bond from 2017 to 2022 for the execution of road projects across the country.

Director General Debt Management Office, DMO, Ms. Patience Oniha, confirmed the figure on Monday in Abuja at the symbolic cheque presentation ceremony of 2022 sovereign sukuk issue proceeds of N130 billion to the implementing ministries performed by Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed.

DMO started issuing a sovereign sukuk in 2017 with a maiden issuance of N100 billion in September.

“The DMO had issued four tranches of Sukuk between 2017 and December 2022, bringing the total amount raised as at December 2022 to N742.56 billion.

“From the sukuk issued between 2017 and 2021, a total of N612.56 billion was raised and deployed to the construction and rehabilitation of sections of 71 roads and 4 bridges covering a total of 2,820.06km,” Oniha said.

Two Ministries – Federal Ministry of Works and Housing and Federal Capital Development Administration ( FCDA) were presented with sukuk bond proceeds cheques for road construction. The Ministry of Works and Housing got N110 billion while Federal Capital Territory Administration (FCDA) received N20 billon.

Describing sukuk bond a novel financing instrument, Oniha said that ,“through the sovereign sukuk initiative, the DMO has demonstrated its strong alignment with the policy of President Muhammadu Buhari on infrastructural development. 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,” she said.

The Federal Government also reaffirmed total release of N1.88 trillion for capital expenditure component to the Ministries Department and Agencies (MDAs) for various capital projects captured in 2022 budget.

Mrs Zainab Ahmed said the Federal Government had so far released the sum of N1.88 trillion for capital expenditure component to the Ministries Department and Agencies (MDAs) for various capital projects captured in 2022 budget as of November 2022.

The released sum, Mrs. Ahmed said, represented 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.

“The 2022 Sovereign Sukuk of N130 billion will 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,” Ahmed said.

“It is important to add 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 are being achieved by the government.

“The private sector and sub-nationals have begun to embrace the instrument and 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,” she said.

The Minister of Works and Housing, Babatunde Raji Fashola, lauded Sukuk bond initiative, describing it a bailout instrument that has helped in fixing Nigerian roads across the six geo-political zones of the country.

“I want to remind ourselves where we were before Sukuk bond introduction and where we are now,” he said,

He recalled that he inherited a meagre sum of N18 billion as total budget for road construction in 2015 compared to N266 billon in 2022.