Infrastructure: FG Turns To Islamic Banking, Raises N350 bn Sukuk Bond

By Fola James

By the end of the year, the Federal Government would have raised N350 billion from the sovereign Sukuk bond in the last three years to fund critical projects across the country, the debt management office, DMO has said.

Sukuk is an Islamic financial instrument which attracts low interest rates.

In 2017 the federal government raised a N100 billion seven-year debut Sukuk bond for the financing of 25 road projects across the six geopolitical zones of the country.

It further raised another N100 billion in 2018 for a seven-year period for the same purpose, amounting to a total of N200 billion raised in two years.

The special fund is used to finance critical infrastructure such as roads, power and others projects across the country, according to the federal government.

The DMO made this revelation two days ago following its announcement that the federal government has began the sale of its third tranche 7-year N150 billion Sovereign Sukuk bond,

The DMO stated that the seven year Islamic Sukuk, referred to as Ijarah, was at a rental rate of 11.2 per cent and would mature in seven years.

DMO stated that the bond will be used to provide key road infrastructure across the six geo-political zones and payable semi-annually.

The circular released by the Office said the subscription window for the bond would close by June 2, 2020.

It said subscribers could purchase N1,000 per unit subject to a minimum subscription of N10,000 and in multiples of N1,000 thereafter with First Bank and Islamic wealth manager, Lotus Capital managing the sale.

It stated that investors could used the bond as security based on the provision under the Trustee Investment Act.

The bond, the DMO also stated would be listed on the Nigerian Stock Exchange, NSE and on FMDQ Over-The-Counter (OTC) platform and be classified as liquid asset by the Central Bank of Nigeria, CBN.