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Sunday, July 26, 2020 08:20 AM / DMO/ Header Image
Credit: LSEEMF
The Debt Management Office (DMO) which is the agency
of the Government charged with the management of the public debt, has in its
almost twenty (20) years of existence supported the Federal Government of
Nigeria (FGN) by raising funds to finance various capital projects as approved
in the Appropriation Acts. Whilst performing this role, the DMO has been
pivotal in the development of the domestic financial markets and is credited
with the introduction of new products, such as Sukuk and Green Bonds. This is in
addition to issuing long-tenored FGN Bonds to enable project financing not only
for the FGN but also for State Governments and Corporates.
One of the landmark initiatives of the DMO was the
introduction of Sovereign Sukuk into the domestic financial markets in
September 2017 to raise the sum of N100 billion to finance twenty-five (25)
Road Projects across the six (6) geo-political zones of the country. Based on
the success of the debut Sovereign Sukuk, another Sukuk for N100 billion was
issued in December 2018 for the same purpose, but this time for twenty-eight
(28) Road Projects, also across the six (6) geo-political zones.
In June 2020, the DMO extended the frontier by issuing
a Sovereign Sukuk for a much higher amount of N162.557 billion. The Third Sovereign
Sukuk received a massive Subscription of N669.124 billion, which is a testament
to the high level of investor awareness about Sukuk when compared to 2017 when
the debut Sovereign Sukuk was issued, as well as, verifiable evidence of the
Road Projects financed by the first two (2) Sovereign Sukuk. The significance
of raising funds for the Government through Sukuk lies in the fact that the
Sukuk is project-tied.
Further, by dedicating the proceeds of the Sukuk to
Road Projects, the DMO is contributing positively towards bridging the gap in
infrastructure in Nigeria. This is in line with President Muhammed Buhari's
commitment to infrastructural development and economic growth.
The deficit in Nigeria's infrastructure has long
been recognized as a major limitation to job creation, poverty reduction and
overall economic growth.
The Outcome of the 2017 and 2018 Sovereign
Sukuk
The deployment of the proceeds of the first and
second Sovereign Sukuk in the sum of N200 billion to visible and verifiable
Road Projects across the six (6) geo-political zones of the country, has
yielded the following benefits: improved safety on the roads financed; faster
travel times; access to markets for goods including farm produce; and job
creation, amongst others. With the improvements, many of the roads that were
hitherto impassable and had become death traps in various parts of the country,
are now wearing new looks. The Road Projects financed through Sukuk in the
North East and North West include the completion of several sections of the
Kano-Maiduguri dual-carriage way linking Kano-Jigawa-Bauchi-Yobe and Borno
States (Potiskum-Damaturu) as well as the sections linking Shuari-Azare in
Bauchi State. The immediate impacts of the sections completed are felt in towns
such as: Shuari, Azare, Potiskum, Damaturu and Maiduguri.
The Kano-Maiduguri Expressway which has benefited
immensely from the Sukuk Funds for up to 180.62 kilometers when fully
completed, will serve as part of the Trans-African Highway No.5 running from
Dakar (Senegal)-Ndjamena (Chad).
It is a major trade route between the North West
and North East of Nigeria and will facilitate trade under the African
Continental Free Trade Area (ACFTA) Agreement. Similarly, the dualization of
Kano-Katsina Road (Phase | Kano Town) at Dawanau Roundabout to Katsina State
Border has created easy access for agricultural products and trade at the
famous Dawanau International Market. In the North Central Region, the
Construction of Oju/Loko-Oweto Bridge over River Benue to link Loko (Nasarawa
State) and Oweto (Benue State) along Route F238 was completed using Sukuk
Funds. The Bridge which has been under construction for many years until the
intervention of Sukuk Funds in 2017, will reduce travel time between Abuja and
the South East axis by as much as 2-3 hours.
The Oju/Loko-Oweto Bridge is the second major
Bridge across the River Benue connecting the North to the South of Nigeria, the
first being the Lokoja Bridge. In particular, when operational, the Bridge will
further facilitate the movement of agricultural produce from the North Central
to other parts of the country. The rehabilitation of Abuja-Abaji-Lokoja
Dual-Carriageway (International Airport link road junction-Sheda Village
Junction) in the Federal Capital Territory (FCT) has been fully completed.
The completion of this section of the Abuja-Lokoja
Road has eased the traffic gridlock especially during festivities at
Gwagwalada, which is Abuja's Southern outlet. In the South-South and parts of
South East, Sukuk Funds have been used for the rehabilitation and
reconstruction of several sections of Enugu-Port Harcourt Dual Carriageway. For
example, Umuahia Town-Aba Township Rail/Road Bridge Crossing in Abia State has
been completed with Sukuk Funds. Other works include the rehabilitation
Enugu-Lokpanta in Enugu State and Lokpanta - Umuahia Town in Abia State, as
well as Section IV of Aba-Port Harcourt Expressway. This is a major
Federal Highway (Route No.3) for the transportation
of raw materials and finished products from the hinterland to the Port and
movement of goods from the Port to the hinterland by businesses located in the
South East.
The Construction of |kom Bridge in Cross River
State is also benefiting from Sukuk. There is also in the South East, Sukuk
intervention on the rehabilitation of sections of Onitsha-Enugu Expressway:
Amansea - Enugu State Border which has been fully completed.
In the South West, the on-going dualisation of
Ibadan-llorin Road (Route No. 2) through the intervention of Sukuk, has
resulted in tremendous progress on this critical commercial road linking the
South West and North Central. Also, the reconstruction
Benin-Ofosu-Ore-Ajebandele-Shagamu Dual-Carriageway, another commercial highway
linking the South West, South-South and South East has benefited from Sukuk
Funds.
Other interventions of Sukuk include the
dualization of Lokoja-Benin Road: Obajana Junction-Benin; Ehor-Benin Road, Edo
State; Okene (Kogi State)-Auchi; and Ehor-Auchi in Edo State where works are
on-going. It is expected that this critical road which connects the North to
the South-South would greatly ensure ease of movement of people and goods along
that corridor. The dualization of Lokoja-Okene-Benin road is expected to
ameliorate the congestion in the city of Okene and reduce the environmental
degradation of the town due to congestion and air pollution. About 39.5km of
the Dual-Carriageway has been rehabilitated with SukukFunds. In addition, the
reconstruction of the long-abandoned Bida—Lambata Road in Niger State has
changed the narrative of that road.
Some of the Road Projects to be Funded by
2020 Sukuk
Some of the very critical roads that will be
rehabilitated and constructed with the proceeds of Sovereign Sukuk issued in
June 2020 include:
The rehabilitation of the Expressway is expected to
ease movement on the Road. It is a trade route for goods between the Northern
part of Nigeria and the commercial city of Onitsha.
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