Nigeria To Use Islamic Bonds For Infrastructural Funding
NIGERIA hopes to use a proposed Islamic bonds issuance programme to help fund big infrastructure needs.
An official told Reuters that the government aims to tie the transaction to one of its several projects.
The country plans to borrow as much as $10 billion from debt markets, with about half of that coming from foreign sources, to help fund a budget deficit worsened by the slump in oil prices that has slashed revenues and weakened the naira.
The federal government is working on a sovereign Sukuk with details expected within the year as part of diversifying its funding sources, Alhaji Mahmoud Isa-Dutse, Nigeria’s Permanent Secretary, Ministry of finance, said yesterday. “We want to use debt more efficiently than we used to in the past. We are looking to borrow, but tied to infrastructure projects,” Isa-Dutse said on the sidelines of the annual meeting of the Islamic Development Bank in Jakarta.
“The government wants to primarily access concessionary sources to fill its funding needs, but any shortfall would be covered through the capital markets,” he added.
“Out of those debt plans, hopefully Sukuk will be one of the sources – either domestic or foreign,” he said.
According to him, Sukuk could be linked to a wide range of projects, from power plants to railways.
Issuance of a sovereign Sukuk is part of a strategic plan developed by the country’s debt management office to develop alternative sources of funding and to establish a benchmark curve for corporates to follow.
In 2013, Osun State issued N10 billion ($62 million) of Sukuk, but no other Sukuk transactions has followed.
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