DMO raises N742.557bn for construction of 4,000km roads, bridges
The Debt Management Office (DMO) has helped the federal government to raise and deploy N742.557 billion to the rehabilitation and construction of 4,000 kilometres of road projects and bridges across Nigeria’s six geopolitical zones and the Federal Capital Territory through the issuance of Sovereign Sukuk.
This is coming as the DMO and its partners finalise plans to issue a fresh N150 Sovereign Sukuk to finance Nigeria’s huge infrastructure deficit.
Nigeria’s infrastructure deficit, amounting to 30 percent of its gross domestic product (GDP), falls short of the international benchmark of 70 per cent set by the World Bank.
Director-general of the DMO Ms Patience Oniha who made the disclosure yesterday at the ‘Investor Meeting for the 2023 Sovereign Sukuk Issuance – Series VI, said “Sukuk is one of the strategies for improving infrastructure”
The director of the highway department at the Federal Ministry of Works, Umar Bakare said funds from Sukuk issuance have so far enabled his ministry to build 60 roads of about 3,200km. He is optimistic that the new Sovereign Sukuk will help to reduce the infrastructure gap.
The DMO on October 3, 2023, announced an offer for a subscription of its sixth Sovereign Sukuk for N150 billion. The Sovereign Sukuk in structure, is a forward Al Ijarah, for 10 years at a rental rate of 15.75 per cent and enjoys similar features as the previous Sukuk. The product has a minimum subscription of N10 (at 1000 per unit) and multiple of N1000 thereafter.
“The funds will be used to finance the rehabilitation of road projects and bridges identified by the implementing agencies of the federal government,” Oniha said at the meeting with investors yesterday in Abuja.
As of 2017 when the DMO first issued Sukuk, the federal government’s investment in roads and bridges was primarily funded through the national annual budget which was inadequate, and to some extent external borrowings, and other initiatives of the government.
Consequently, the federal government, through the Debt Management Office initiated the Sukuk funding programme for financing road infrastructure in 2017.
The DMO has 10 transaction parties comprising BURAQ Capital Limited as the financial adviser, with three issuing houses, two delegate trustees, two solicitors to the delegate trustees and two solicitors to the issue.
The Sukuk is designed to make opportunities for ethical investors to invest in. “We are supporting that sector by making the opportunity available to them to invest in. We promise to be as efficient as possible,” the DG said.
The main objective of the initiative is to attract expertise and sustainable investment/funding in the development of road infrastructure to maximise the use of assets along the Right of Way and develop other highway infrastructure.
The representative of the works ministry said they have maintenance engineers who constantly monitor the construction work on the roads to ensure quality delivery.
Representative of the Federal Capital Territory Administration pleaded with the investors to repose confidence in the federal government securities to fund Abuja which he said is the face of the nation.
He pleaded with the authorities to allocate more funds to the FCTA for the building of roads.
