The Debt Management Office (DMO) has raised N615.557 billion through Sukuk for the rehabilitation and construction of new roads across the country in four years.
The Director-General of DMO, Ms Patience Oniha, made this known in her presentation titled: “Nigeria Public Debt – Some Considerations,” at the Capital Market Correspondents Association of Nigeria (CAMCAN) 2022 conference in Lagos.
Oniha said that a total of N615.557 billion had been raised through Sukuk from September 2017 to December 2021.
She noted that N365.557 billion of which had been deployed for the construction of 1,881km of roads and six bridges.
“The last Sukuk issued in December 2021 targets 71 road projects,” Oniha said.
She listed some of Sukuk funded projects as the reconstruction of Bida-Lambata road in Niger State, rehabilitation of Lagos-Ota-Abeokuta road in Lagos and Ogun states and rehabilitation of Enugu-Port Harcourt road section III Enugu-Lokpanta, in Enugu State.
Others are the rehabilitation and reconstruction of Enugu-Port Harcourt dual carriageway section II Umuahia-Aba in Abia State and rehabilitation of Kano-Katsina road Phase I, Kano State, among others.
A Sukuk is an Islamic financial certificate that complies with Islamic religious law commonly known as Sharia.
It involves the means by which corporations or governments raise capital and the forms of investments that are made in accordance with Shariah.
She also said that a total of N25.69 billion had been raised through sovereign Green bonds from December 2017 to June 2019.
The director-general said that the funds had been deployed to seven selected projects in various sectors including renewable energy, agriculture, water, transport and afforestation.
Speaking on purpose for borrowing, Oniha said that governments borrow to finance budget deficits, finance specific projects and refinance maturing debt obligations.
She acknowledged the support the Debt Management Office (DMO) has granted to the Exchange over the years.
“Exchange always visits the DMO for different proposals and they are always granted. We hope the joint collaboration and support will continue because it is very key to the debt capital market,” she added.
Mr Charles Egbunonwo who represented the Chairman, Association of Securities Dealing Houses of Nigeria (ASHON), Mr Sam Onukwue, said the theme selected was a topical issue in Nigeria’s economy.
According to him, “We are all aware of what is happening in terms of revenue and growing debt level in the economy.”
Also speaking, the 1st Vice President, the Chartered Institute of Stockbrokers (CIS), Mr Oluropo Dada, who represented the President, Mr Oluwole Adeosun, noted that there was nothing wrong with government borrowing.
In his words, “If the government does not borrow again, how do I sustain my profession? We have issuers that secure these securities and trading platforms.
“Without trading platforms, we can’t have stockbrokers. So, there is nothing wrong with government borrowing. The issue all around the world is whether these debts are sustainable.
“If our debt-to-GDP is doing well, what about the service ratio to revenue that is over 90 per cent? What happened to the GDP?
“We seem to be comparing ourselves to big economies and the market capitalisation of five companies in the US is larger than the entire GDP of Africa.
“Why are we comparing ourselves to bigger economies? We cannot compare ourselves to the US and other bigger economies because there are some fundamental issues. The fundamental issue is the role of the government to provide an enabling environment.
“Provide infrastructure, security among other things. If the government does not solve the issue of enabling the environment, it will be difficult to solve our problem of revenue and debt service.”
