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Nigerian Government Raises N669 Billion Sukuk Bonds Through Capital Market In 2 Years

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The Federal Government has said that it raised the sum of N669 billion from the Nigerian capital market through the issuance of Sukuk Bonds.

The funds which were raised by the federal government through the Debt Management Office (DMO) were from the capital market between 2018 and 2020.

This disclosure was made by the Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, at the Chartered Institute of Stockbrokers (CIS) 2021 national workshop on Thursday, according to NAN

The theme of the national workshop was: “Leveraging the Financial Markets to Achieve Double-Digit Economic Growth for Nigera.”

Ahmed said, “The Federal Government through the DMO had raised up to N669 billion from the capital market through three different issuance of Sukuk Bonds. This financing was used to construct and rehabilitate more than 44 roads across the six geo-political zones of our country.

“Also worthy of note, is the offer for subscription of the Federal Government of Nigeria Savings Bonds of the DMO which has been executed successfully, bond issue after bond issue. What is pleasing to us, is that every time the DMO goes for bond issue, the bond are several times oversubscribed.

“This shows the interest of the investing public in Nigeria putting their monies to support the Federal Government of Nigeria in bridging our infrastructure deficit gaps.’’

The minister disclosed that the Federal Government would issue another Eurobond in September to finance capital deficit.

She said, “The Federal Government of Nigeria also has access to the international markets with a number of Eurobonds issuance to finance capital deficit and the next round of Eurobond issuance would be sometime in September this year. We will be going out to international capital market and already we have very positive indications to that regard.’’

Ahmed noted that the Federal Government recently approved the establishment of an Infraco Company, an infrastructure company, envisaged to be world-class infrastructure development vehicle for Nigeria.

She said, “This company will serve as a platform for seamless public-private partnership in infrastructure financing in the country, interfacing with institutions such as Central Bank of Nigeria, the Nigerian Sovereign Investment Authority, the pension funds and other financial institutions.’’

The minister also pointed out that the Nigerian Capital Market has over the years provided access to significant long-term development projects to the government of Nigeria and also to the other tiers of government and also the private sector.

  • Sukuk bonds refer to investment certificates or notes which evidence proportionate interest in ownership of tangible assets, usufructs and services or investment in the assets of particular projects or special investment activity that adhere to the principles of Shariah.
  • The basic principle behind Sukuk, popularly known as an Islamic or Shariah-compliant “Bond”, is that the holder has undivided ownership right in a particular asset and is therefore entitled to the return generated by that asset. As a component of Islamic finance, Sukuk is a non-interest based investment and financing instrument but its application is not restricted to Muslims as it conforms to ethical standards and justice.
  • The funds from the bond have been used for the construction and rehabilitation of some key economic roads across the 6 geopolitical zones of the country.
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