The federal government on Monday launched the ₦300 billion Sukuk Series VII in Abuja as part of efforts to boost infrastructure financing through ethical investment instruments. The issuance received strong interest from investors, with calls for increased allocation to match demand.
In her remarks at the launch, Director-General of the Debt Management Office (DMO), Ms Patience Oniha, emphasized that the funds would be used for the construction and rehabilitation of roads and bridges across Nigeria’s six geopolitical zones.
“Infrastructure is crucial to Nigeria’s socio-economic development, as it supports and drives economic progress,” Oniha stated.
“Nigeria’s road network is fundamental to the nation’s economic activities, facilitating the movement of goods and passengers across its vast landscape.”
She noted that the country’s road infrastructure has been plagued by inadequate maintenance and underinvestment, compounded by a growing population. This, she explained, has prompted the government to intensify infrastructure investments in partnership with the private sector.
Oniha defended the continued use of Sukuk proceeds for infrastructure, citing the ongoing need to accommodate economic activity and population growth.
Since the debut Sukuk in September 2017, the Federal Government has raised a total of N1.093 trillion through six issuances. The inaugural N100 billion issuance funded 25 road projects, delivering 482 kilometers of roads across the six geopolitical zones.
She added that “Sukuk now constitutes about 2 percent of Nigeria’s domestic debt instruments, while FGN Bonds make up 77 percent.”
Providing an update on Nigeria’s public debt status, Oniha assured stakeholders that “the country’s debt remains within manageable limits and sustainable.”
She added that “recent tax reforms passed by the National Assembly and other government efforts would increase revenue, helping to reduce the debt-to-revenue ratio.”
Responding to investor interest in raising the Sukuk volume, she explained that “the borrowing through Sukuk is part of the federal government budget, and we take part of the new domestic borrowing in the budget to match with approved projects.”
“As the demand for Sukuk grows, we may need more projects included in the budget to be funded through Sukuk, but that requires legislative approval.”
Mr Ayo-Oluwa Aderibigbe of Stanbic IBTC Capital commended the use of Sukuk, noting that its impact is already visible in many parts of the country.
He cited the marina in Lagos as “a testament to the positive changes brought about by Sukuk investments in the country’s infrastructure landscape”.
Mr. Attahiru Maccido, Managing Director of Buraq Capital Ltd, the financial advisers to the Sukuk issuance, added that the proceeds would go directly to contractors selected by the Federal Ministry of Works and the Federal Capital Territory Administration (FCTA).
“The Sukuk instrument is backed by a federal government guarantee,” he said, adding that “investors will receive annual rental payments of 19.75 percent every six months for the 7-year tenor. At the end of the tenor, investors will receive the return of their capital.”
The Sukuk Series VII marks a continuation of the federal government’s efforts to fund infrastructure through Shariah-compliant, non-interest financial instruments that appeal to both ethical investors and the general market.
