FG Shares N100bn Sukuk Equally to Six Zones for 25 Economic Roads

Contractors to access funds immediately

The federal fovernment has released the proceeds of the N100 billion Sukuk bond to 25 key economic road projects across the country under the purview of the Federal Ministry of Power, Works and Housing.

Minister of Finance, Mrs. Kemi Adeosun, handed over the funds via a cheque to the Minister of Power, Works and Housing, Mr. Babatunde Raji Fashola.

The federal government had issued the debut Sovereign Sukuk of N100 billion in September 2017, which was successfully completed last week. The Sukuk bond has a tenor of seven years.

According to a statement issued by Mr. Oluyinka Akintundethe, the Special Adviser, Media and Communications to the Minister of Finance, Adeosun, who disclosed that the offer was oversubscribed to the tune of N105.87 billion, said the milestone was a sign of confidence on the Nigerian economy and the administration of President Muhammadu Buhari.

She added that the Sukuk proceeds would unlock the potential of Nigeria.

Adeosun said, “This is the first Sukuk bond issuance for Nigeria. It is about financial inclusion and deepening of our financial markets.

“The proceeds will be used to further support government capital spending for 2017 - the construction and rehabilitation of 25 key economic roads across the six geo-political zones of the country.

“The roads will ease commuting, spur economic activities across the country and further close our infrastructural gap,” the minister stated.

Each of the geo-political zones of the country is expected to receive the sum of N16.67 billion for road projects in their respective zones.

The North-central and South-south zones accounted for five each of the 25 key economic road projects, while the North-east, North-west and South-east have four road projects each.

Three projects are to receive funding from the Sovereign Sukuk proceeds in the South-west zone.

Part of the projects selected included the Loko Oweto Bridge and Abuja-Lokoja Road, the EnuguOnitsha and Enugu-Portharcourt expressway, the Kano-Maiduguri Road, the Kano-Katsina Road, Benin-Ore-Shagamu and IbadanIlorin Road, as well as the YenegweKolo-Otuoke-Bayelsa Palm Road.

“We are proud to be here. As you know, Nigeria is not the only country in Africa to have Sukuk, South Africa already has, the U.K has, and many other countries. It is all about inclusions, getting people who would ordinarily not want to invest because of the interest elements, to fill this part of the investment community.

“The money is not staying with us, it is going straight out to the contractors, and it is a sign of confidence because we are using this money on roads that are going to unlock the economy,” she added, while disclosing that parts of the subscribers in the Sukuk were the country’s pension funds which is now in trillions of naira.

Earlier, the Minister of Power, Works and Housing, Fashola, commended the Finance Minister, the Director-General of Debt Management Office, Ms. Patience Oniha, and the financial advisers for the bond issuance for their painstaking efforts realising the milestone.

Fashola assured the ministry’s contractors that the federal government was committed to the funding of its infrastructural projects across the country.

Fashola, in his remarks, explained that financial challenges of the road contractors were being sorted out by the government through the Sukuk fund.

He said: “We met on the 19th and you all alluded to what the problems were. First of all, I think the problems you identified were broadly two - finance and the weather. I promised you that we will solve the finance problem and nature will take care of the weather.

“The finance problem would be solved and you will hear from the minister of finance. I want to thank her and her ministry, the DMO, and all the team who led the Sukuk. There is still a lot of promise in this economy, not only by the full subscription of the Sukuk but by its over subscription. For me, I will only ask that you respond to the kind gestures.”

Also, Oniha explained in her remarks that: “The money is available, it is kept in a dedicated account and so it goes into the projects. But beyond that, the government has thought of putting a check by making sure there is trustee that ensures the funds are disbursed purely for the projects and we get the value that we want.”

“We believe that this is a first stage and a clear demonstration of a product that has appetite in the market, and we intend to use more of such products to finance infrastructure and support the objectives of government in investing in infrastructure,” Oniha added.