..Says N9.18trn allocated to debt servicing in 2024 budget

The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun has recommended an increased participation in the non-interest market to reduce huge fiscal constraint on the Government.

The Minister explained that Nigeria’s high debt service to revenue ratio was posing significant fiscal constraints on the Federal Government.

Speaking at the opening of the Securities and Exchange Commission (SEC) Nigeria-Islamic Financial Services Board (IFSB) International Forum, Edun further disclosed that the Federal Government in its proposed 2024 budget sets aside a whooping N9.18 trillion out of the total budget of N27.5 trillion for debt servicing is expected to gulp N9.18 trillion.

He noted that the non-interest financial market or Islamic financial market presents a cheaper and sustainable way to raise funding for major infrastructure, adding that Nigeria needs to increase its participation in the global non-interest financial market.

He expressed optimism that the outcome of the forum would “not only strengthen the ties between the Islamic finance community around the world but would also lead to us taking more advantage of the huge funds that are available in the non-interest world so as to have a viable way of financing the green sustainable growth which is the agenda of Nigeria.”

“To attract the investments that would increase the productivity of the economy, grow the economy, create jobs, reduce poverty and help the President meet his promise to Nigerians, a better life for all.”

Also speaking at the forum, the Director General, SEC Nigeria, Mr. Lamido Yuguda pointed out that although there has been significant growth in the non-interest financial sector in Nigeria, it remains very small when compared to the global market.

Yuguda explained that the structure of the market makes it a fair, just and equitable financial market rather than just an Islamic financial market.

He held that in 2022 the Islamic Finance Industry had an estimated size of $ 3.25 trillion, with global Sukuk issuances valued at $182.72 billion,” adding that in Nigeria, the Islamic finance segment of the financial industry reached an estimated size of $2.9 billion as at the end of 2022, with outstanding Sukuk forming the largest part at 57 percent, followed by Islamic banks at 42 percent (total assets), and the remaining 1 percent split between Islamic funds (total assets) and takaful (total contributions)”.

He stated that this “shows that the Nigerian market makes up just 0.9 percent of the global non-interest market, indicating the dire need for more growth. With the country boasting a large population and a significant proportion unbanked, the long-term potential for Islamic finance in Nigeria is immense.”

“The Non-Interest (Islamic) Capital Market in Nigeria has undergone transformative growth, becoming an integral part of our financial framework, offering a distinctive platform for ethical and Shari’ah-compliant investments. The NICM contributes to the diversity of our financial markets in line with our revised capital market Master plan 2021 -2025.

“Since the debut of Sukuk in Nigeria in 2017, the Debt Management Office has raised almost N1 trillion to finance over 5,000 kilometers of critical roads & bridges with all such issuances oversubscribed.

“The oversubscription of the most recent 6th Federal Government of Nigeria Sukuk by 435 percent underscores investor confidence, showcasing the strategic role of Sukuk in infrastructure development and financial inclusion.

“We are all aware that Sukuks backed by assets promote risk sharing in high-risk projects, offer flexibility in project stages and foster public-private partnerships.”

On his part, the Secretary General, IFSB, Dr. Bello Lawal Danbatta said the global non-interest financial sector is expected to grow by 10 percent in 2023-2024 year-on-year.

Dr. Danbatta said Nigeria with its huge population can lead the Africa continent in exploring the potentials presented by the non-interest financial sector.

“We have the opportunity to be able to cut down on the excessive devaluation of our currency through the leveraging of a non-interest capital market to build our own designed infrastructure,” he added.

NNPC Limited says it has signed two gas deals at COP28. The deal covers a floating liquefied natural gas deal and a small-scale LNG deal at the ongoing COP28 in Dubai.  According to the company, the deal is both for domestic, and international Markets. There is an Agreement on 421 tons per-day Small-Scale LNG Project in Ajaokuta and an MoU on Floating LNG.

In a December 6 statement signed by the Chief Corporate Communications Officer at the Nigerian National Petroleum Company Limited (NNPCL), Olufemi  Soneye,  the company said it has signed two major agreements to deliver LNG to both domestic and international markets.

During two separate signing ceremonies held on the sidelines of the ongoing COP28 conference, NNPC Limited signed a Memorandum of Understanding with Wison Heavy Industry Company Limited, a Chinese company, for the development of a floating LNG project in Nigeria, targeting the international LNG market.

The Floating LNG MoU was signed by the Executive Vice President, of Gas, Power & New Energy, Olalekan Ogunleye on behalf of NNPC Ltd and Mr. Kai Xu, Managing Director of Wison Ltd, on behalf of his company. Both parties agreed to work together to chart a roadmap for the project development that will lead to an investment decision.

On the other hand, NNPC Prime LNG Limited, an arm of NNPC Trading Limited signed a Supply, Installation and Commissioning Agreement with SDP Services, an independent oil and gas company, for a 421 tonnes per day LNG project targeting the domestic LNG market.

The Small-Scale LNG (SSLNG) Project agreement was signed by the Managing Director, of NNPC Trading Ltd., Mr. Lawal Sade, on behalf of NNPC Prime LNG Ltd. while Mr. Abhinav Modi, Managing Director of SDP Services Ltd., signed on behalf of his company.

The MD NNPC Trading Ltd., Mr. Lawal Sade said the SSLNG Project will boost the domestication of LNG utilisation by supporting the growth of auto-gas initiatives across the country.

He said, “We are looking at a time frame of 12 months from execution to the commissioning of the project. The project will deliver about 420 tonnes per day of LNG per day into the domestic market, which will enhance efficient delivery of gas to the auto-gas/CNG and industrial customers in line with the Presidential mandate.”

Note that the SSLNG Project, which will be located at Ajaokuta in Kogi State, will ensure the efficient supply of LNG to the Autogas/Compressed Natural Gas (CNG) and industrial/commercial customers nationwide. The LNG Project is expected to be operational by December 2024.

Speaking shortly after the signing ceremony, the EVP Gas, Power & New Energy, Mr. Olalekan Ogunleye said NNPC Ltd. is committed to delivering gas to industries nationwide and accelerating the Company’s gas commercialisation efforts through the floating LNG Project.

He said, “We see both projects as having enormous impact all over the country because they are central to the commercialisation of Nigeria’s abundant gas resources and ensuring that our country earns the much-needed foreign revenue from its abundant gas assets. It is also consistent with NNPC Management’s drive to deliver on Mr. President’s gas and power aspirations across the country.”

Following nationwide outcry by Nigerians regarding the 2024 Appropriation Bill, the Chief of Staff (CoS) to the President, Femi Gbajabiamila, has denied that N21 billion was budgeted for the renovation of his residence.

In a post on his official X (formerly Twitter) handle, Gbajabiamila said there was no provision in the 2024 Appropriation Bill for the renovation of his residence, stressing that he lives in his private apartment.

He said the amount quoted online was for renovating the Presidential Quarters in Dodan Barracks and the Vice President’s Lodge in Lagos.

He wrote, “I have seen social media commentary regarding the 2024 Appropriation Bill, particularly the provisions under the Office of the Chief of Staff to the President. Owing to the erroneous nature of these reports, it has become necessary to clarify that there is no provision in the 2024 Appropriation Bill for the renovation of any residence for the Chief of Staff to the President. I live in my private residence.

“The sums mischievously quoted by online bloggers and fake news merchants are for renovating the Presidential Quarters in Dodan Barracks and the Vice President’s Lodge in Lagos, to overhaul the information management and communications facilities in the Presidency to meet modern standards and to provide vehicles for the staff of the Presidency.”

Gbajabiamila explained that the sums earmarked for these projects are stated in the budget proposal and bear no resemblance to the deceptive online commentary.

He said that President Tinubu’s administration welcomes and encourages scrutiny of government expenditure; adding that is why the budget proposal is publicly available.

“The sums proposed for these projects are clearly stated in the budget proposal and bear no resemblance to the deceptive online commentary.

“This administration welcomes and encourages scrutiny of government expenditure; this is why the Budget proposal is publicly available. However, healthy public debate about government actions requires us to be responsible with our utterances and engage based on facts rather than insinuations and falsehoods,” he concluded.