N150 billion Sukuk to fund 53 road projects

The federal government will use the net proceeds of its ongoing N150 billion Sukuk issuance to fund some 53 road projects across the country.

Director General, Debt Management Office (DMO), Ms. Patience Oniha, at an investors’ forum yesterday in Abuja, said the 53 roads cover more than 3,000km.

She said the tolls collected from the roads will be used to repay the Sukuk. Sukuk is a non-interest, asset-backed bond that is based on the principles of Islamic finance.

Mr. Hassan Usman of Buraq Capital Limited and former Managing Director of Jaiz Bank described Sukuk as an attractive ethical instrument with stringent project approval and disbursement mechanisms.

He emphasised its efficiency and assured that funds raised would strictly serve their intended purpose.

Oniha said the federal government remains committed to value-driven borrowing through project-focused Sukuk, which has contributed to visible road and bridge projects.

Recognizing infrastructure’s pivotal role in economic growth, she stated, “infrastructure is an enabler of economic development.”

She expressed optimism that the N150 billion Sukuk would be oversubscribed, noting that the extra funds that may be realised will be used for available projects.

According to her, government’s optimism in the over subscription of the Sukuk is based on the fact that the federal government has made significant investments in infrastructure development, through which it has managed to raise a total of N742 billion.

She said the massive investment serves as a strong example or evidence of the high level of interest and enthusiasm that investors have shown in Sukuk.

According to Oniha, “the government and people involved believe in the use of Sukuk and plan to continue offering it every year. The hope is that ethical investors will invest in the Sukuk.”

She invited ethical investors to take advantage of the opportunities present in sukuk to participate in subscribing to the offer. She encouraged widespread participation, highlighting that Sukuk VI’s proceeds would fund projects across the country’s six geopolitical zones.

The DMO boss noted that banks are interested in sukuk because of “its tax-exempt status and the liquidity it affords them”.

Ms. Oniha stressed the importance of infrastructure for attracting investors and economic growth. She acknowledged the government’s resource limitations and the need to involve the private sector in infrastructure funding.

The N150 billion 10-Year Ijarah Sukuk is set to mature in October 2033, offering a rental rate of 15.75 percent per annum.

In Abuja, Sukuk proceeds have already supported road construction projects, addressing critical infrastructure needs.

It’s worth noting that Nigeria was ranked 130th out of 141 economies in the 2019 Global Competitive Index Report for infrastructure quality.