An analysis of the Federal Government's domestic debt service report for each quarter by the Debt Management Office revealed that N8.17bn was paid on rentals for Sukuk bonds in the first quarter of 2023. Interestingly, the same amount was paid in Q1, 2022.
Sukuk bonds are sharia-compliant bond-like instruments used in Islamic finance. Investors who purchase these bonds receive a certificate of ownership and the money is invested in assets across the country, granting the investor partial ownership.
The Federal Government also commits to buying back the bond at a specific future date, and investors receive rental income on their investments.
The Debt Management Office recently received recognition for its achievements, winning three awards at the EMEA Finance Achievement Awards 2022. One of the awards was the Best Local Currency Bond in EMEA for the Federal Government of Nigeria N250bn SUKUK.
Over the years, the Federal Government has utilized the funds raised through Sovereign Sukuk, amounting to N612.56bn between 2017 and 2021, for the construction and rehabilitation of 77 road projects and 23 bridges, aiming to enhance infrastructure development in the country.
The finance minister said, “The FMWH and FCTA will be sharing the 2022 Sukuk Issue Proceeds of N130bn, which was successfully issued by the Debt Management Office on behalf of the Federal Government of Nigeria on December 02, 2022 as follows: Federal Ministry of Works and Housing – N110,000,000,000.00 and Federal Capital Territory Administration – N20,000,000,000.00.
“The 2022 Sovereign Sukuk of N130bn will be released as part of the Capital Expenditure in the 2022 Appropriation Act, which has been extended by the National Assembly to March 31, 2023.”
She also noted that as of November 2022, N1.88tn had been released as capital expenditure, representing about 40 per cent performance when compared to the total capital budget of N4.7tn.
