Invest Sukuk Fund in Capital Projects to Stimulate Economy, FG Advised
A Partner with PricewaterhouseCoopers (PwC) on Global Board for Leadership Development, Taiwo Oyedele, has stated that investing the N100 billion Sukuk fund in non-capital projects and infrastructure would have negative impacts on the economy.
He has therefore urged the federal government to ensure that the N100 billion is invested in capital projects to stimulate economic growth.
Oyedele stated this at the weekend in Lagos at the 2017 Empowerment Summit organised by the Professional Accountants Christian Ministry (PACM), a platform created for chartered accountants to discuss topical issues of concerns, interact with opinion leaders and equip members with the latest information.
He urged the federal government to ensure that the fund is judiciously invested to fund projects which are selffinancing and yield returns
on investments.
He expressed confidence in the words of the Minister of Finance, Mrs. Kemi Adeosun, who recently noted that the fund would be invested in capital projects, stressing that this would help in repositioning the economy after the exit from recession.
Oyedele further stated that borrowing is a huge challenge for the economy, but noted that the country’s Gross Domestic Product (GDP) to debt ratio is low judging by global standards. “It is under 20 per cent, compared to the United State (US) where it is 90 per cent,” he said.
He however noted that there is no revenue to support borrowing, adding that when borrowing is carried out, the debt needs to be serviced.
He lamented that government does not have enough revenue to take care of infrastructure, pay salaries of public servants and do other things.
He said: “Government has no choice, but to borrow that is why the debt profile is rising. We have to do things differently so that we can raise money internally to fund infrastructural and capital projects. Taxation is an important issue therefore government should take a critical look at it. The economy cannot continue to depend on oil. When you borrow to finance a road project that has toll, it is a project that is capable of paying for itself. But you borrow to take pilgrims for Hajj or Jerusalem that is a disaster waiting to happen. We cannot afford anymore.”
The Director-General of the Debt Management Office (DMO), Patience Oniha, recently said that the N100 billion raised by the government through Sukuk, would be spent on critical road infrastructure across the country.
The DMO boss assured potential investors that the Sukuk was backed by the full faith of government and was one of the avenues through which it intended to raise funds for capital projects.