Finance Ministry Releases Proceeds Of N250bn Sukuk Bond To Three MDAs

The Federal Government has released the proceeds of the N250bn Sukuk Bond to three Ministries, Departments and Agencies for the implementation of capital projects contained in the 2021 budget.

The infrastructure projects are to be implemented by the Ministry of Works and Housing, Federal Capital Territory and Ministry of Niger Delta Affairs.

The Minister of Finance, Budget and National Planning, Zainab Ahmed, who released the fund on Thursday in Abuja, said the N250bn was part of the capital expenditure in the 2021 appropriation.

The symbolic cheque presentation was witnessed by the Minister of Works and Housing, Tunde Fashola; Minister of FCT Mallam Mohammed Bello; and the Minister of Niger Delta Affairs, Senator Godswill Akpabio.

The National Assembly had extended the implementation of the capital component of the 2021 budget to March 31, 2022.

The Sukuk is a strategic initiative that supports the development of infrastructure, promotes financial inclusion and deepens the domestic securities market.

Since the establishment of the initiative in September 2017, the Debt Management Office had issued three Sovereign Sukuk in 2017, 2018 and 2020.

With the latest N250bn sukuk bond proceeds, the fourth in the series, the amount deployed to funding road projects from 2017 to date stood at N362.557bn.

The DMO had on December 29, 2021 raised the N250bn on behalf of the federal government for three ministries to carry out road projects.

A breakdown of the proceeds showed that the Federal Ministry of Works and Housing received N210.565bn; Federal Capital Territory Administration N29bn; and Ministry of Niger Delta Affairs N10.435bn

The Finance Minister said that the government will continue to raise the needed fund and prioritize spending for critical infrastructure in the country.

She said, “The government will continue to prioritize spending on critical infrastructure in order to sustain the momentum on GDP growth.

“As you may be aware, the GDP is projected to grow by 4.20 per cent in 2022. This can only be possible through steady increase in spending on critical infrastructure, such as roads.”
On the implementation of the capital component of the 2021 budget, she said that as of November 2021, N3.40trn had been released to various agencies of government.

This, according to her, represents over 74 per cent of budget performance compared to total capital budget of N4.569trn in the 2021 budget.

From the N3.40trn so far released, she said that N2.98trn representing 83 per cent of the provision was for MDAs’ capital, N369.9bn for Multilateral/Bilateral Project-tied loans, and N49.52bn was for capital projects of Government Owned Enterprises.

Also speaking at the event, Fashola recalled that the recession that Nigeria experienced in 2016 necessitated the issuance of Sukuk Bond.

He said, “Recall in 2016 thereabout, there was recession. The Economic Management Team was tasked to mobilize capital for infrastructure partly to ease cost of doing business, transportation of goods and people.

“One of the funding sources adopted was Sukuk. As soon as announced, hell was let loosed. They claim its adoption was to Islamize Nigeria. The first sukuk, N100bn was applied equitably to each zone. In the fullness of time, people began to see its usefulness.”

Earlier in an opening remark, Director – General, Debt Management Office (DMO). Ms. Patience Oniha said deploying Sukuk proceeds to funding infrastructure projects is in line with one of the strategic objectives of the administration of President Muhammadu Buhari, which is the development of infrastructure.

“Improvement in infrastructure due to its multiplier effects, is widely accepted as one of the best means of creating jobs, supporting and attracting new business and promoting overall growth and development,”the DMO DG said.