Nigeria’s federal government has explained that proceeds of the N250 billion sovereign Sukuk issued last December by the Debt Management Office (DMO) would be released as part of the 2021 capital expenditure.
This is in line with the Appropriation Act, which had been extended to March 31, 2022, by the National Assembly.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, who stated this in Abuja, on Thursday, also disclosed that a total of N3.4 trillion had been released for capital projects as of November 2021.
Speaking at the symbolic cheque presentation ceremony of the N250 billion Sukuk proceeds to the implementing ministries, the minister disclosed that since the emergence of Sukuk as a financing window for infrastructure in September 2017, a total of N362.557 billion had been given to the Federal Ministry of Works and Housing (FMWH) to fund key road projects.
Ahmed stated that in view of the significant milestones recorded in the use of Sukuk to reconstruct and rehabilitate road infrastructure, with visible evidence, the government decided to incorporate other ministries with critical road projects into the Sukuk funding structure.
She said: “Today, we have the Federal Capital Territory Administration (FCTA) and Ministry of Niger Delta Affairs (MNDA) joining us. The three ministries (FMWH, FCTA and MNDA) will be sharing the Sukuk issue proceeds of N250 billion, which was successfully issued by the Debt Management Office (DMO) on behalf of the Federal Government of Nigeria on December 29, 2021.”
The minister stated that the disbursement of the N250 billion gives the FMWH N210,565,000,000.00; FCTA -N29,000,000,000.00; and MNDA – N10,435,000,000.00.
On the performance of the 2021 budget, Ahmed noted that as of November 2021, N3.4 trillion had been expended on capital projects, which represented over 74 per cent performance when compared to the total capital budget of N4.569 trillion.
According to her, out of the released N3.4 trillion, N2.98 trillion represented 83 per cent of the provision for ministries, departments and agencies (MDAs’) capital, N369.9 billion for Multi-lateral/Bilateral Project-tied loans, and N49.52 billion as Government Owned Enterprises (GOEs) capital expenditure.
Assuring that the government would continue to prioritise spending on critical infrastructure in order to sustain the momentum on gross domestic product (GDP), the minister noted the 4.2 per cent projected growth in 2022 can only be possible through steady increase in spending on critical infrastructure, such as roads.
“I wish to congratulate the DMO for the introduction of the Sovereign Sukuk and for the successes recorded in raising the funds through the product, which now stands at a total sum of N612.557 billion,” the minister said.
In her remarks, the Director General, DMO, Ms. Patience Oniha expressed delight that since the debut N100 billion Sovereign Sukuk in September 2017, the DMO had issued three more, getting better each time and bringing the total amount so far raised through the Sukuk window to N612 557 billion.
Oniha noted that the introduction of Sukuk as a source of raising funds for government had improved road infrastructure across the six geo-political zones.
According to her, the acceptance of Sukuk by investors and the verifiable evidence of its benefits had encouraged some state governments and institutions to raise funds through Sukuk issuance.
On the last Sukuk issued last December 29, Oniha stated that the level of investor interest in the product was evident from the subscription of over N865 billion received from diverse investors for the N250 billion offered.
Also speaking at the event, the Minister of Works and Housing, Babatunde Fashola highlight some of the results achieved with the proceeds of Sukuk since its debut in 2017.
According to him, the first Sukuk of N100 billion was deployed to 25 roads with a total delivery of 482 kilometers of roads across the country, while the second Sukuk in 2018 of the same amount was deployed to 28 roads and delivered a total of 683 kilometers of roads.
The minister added that the third Sukuk issued in 2020 for N162 billion was deployed to 44 roads with a total of 757 kilometers of roads delivered.
He said: “Many of the roads have been awarded before we came and it was not funded. And each year Sukuk commits to milestone kilometers you must deliver with this money and the managers with the consultants and our people go to sites to monitor and verify before payment is made.
“But another impact of it is that it has helped to create a consistent employment and engaged for 97 construction and contracting companies who are keeping people at work. We are demanding supply and diesel, bitumen, asphalt, concrete and that is how the money is moving round the economy.”
Ministers from the two other implementing ministries of the N250 billion Sukuk procceeds, including the FCT Minister, Mohammed Bello and his Niger Delta Affairs counterpart, Senator Godswill Akpabio attended the event.
Ndubuisi Francis in Abuja
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