The Debt Management Office (DMO) has announced the commencement of subscriptions for a N300 billion Series V11 Ijarah Sukuk to fund critical road projects across the country.
The offer which opened on Monday would bring total subscriptions so far to about N1.09 trillion.
The issuance of the new N300 billion Series VII Sukuk is part of the federal government’s broader infrastructure financing strategy.So far, over 4,000 kilometres of roads across the country have been financed through Sukuk.
This is the seventh in the series of Sukuk issuance, and the highest since the Islamic investment instrument made its debut in Nigeria in September 2017.
The offer is with a seven-year tenor and annual rental rate (interest) of 19.75 per cent, as part of the federal government’s domestic funding sources for the 2025 budget.
The Director-General of the DMO, Patience Oniha, made reference to recent macroeconomic improvements, including the upgrade of Nigeria’s credit outlook by global ratings agency, Fitch, adding that such developments were indicative of the progress made in both fiscal and monetary management.
According to her, sustainable development is a journey and not something that happens in one day, adding that, “current policies are steering the country in the right direction.”
She attributed the progress partly to recent reforms by the Central Bank of Nigeria (CBN), particularly those targeting the forex market.
“There’s more transparency now. FX supply has improved, and the rates have become more stable. Some of the measures were difficult at first, but the benefits are beginning to show,” she said.
Subscriptions for the Series VII Sukuk N300 billion Sukuk with a seven-year tenor (2032), which opened yesterday, run through next Tuesday.
Minimum subscription has been set at N10,000 and in multiples of N1,000 per unit, thereby promoting inclusivity.
On the N300 billion Series VII Sukuk, Oniha said it was part of approved borrowings by the government to cover budgetary shortfalls and was officially encapsulated in the debt records.
She reassured investors about the structure and sustainability of Nigeria’s debt, noting that the country’s external borrowing was sourced from a diversified pool including multilateral institutions like the World Bank and African Development Bank, bilateral partners such as China, India, and Germany, and commercial markets such as the Eurobond space.
“Over 60 per cent of our external debt is from multilaterals and bilaterals, which offer more favourable terms than commercial debt. This diversification reduces our exposure to market shocks and provides stability,” she stated.
Oniha also expressed optimism that recent presidential initiatives would further strengthen revenue from oil and gas, which remain a significant component of national income.
The DMO boss, who also commented on the nation’s public debt, said the total debt stock stood at N144.67 trillion as of December 2023, almost evenly split between external and domestic components.
She explained that the major factor in the growth of the debt stock was the devaluation of the naira, which culminated in the rise in the value of dollar-denominated debts when converted to local currency.
“The external debt has remained around $42.5 billion, only rising slightly after a $2.2 billion Eurobond in December. But due to the weaker Naira, the debt stock in local terms appears higher,” Oniha said.
Oniha also disclosed that the inclusion of Ways and Means Advances, amounting to about N30 trillion, contributed significantly to the total debt figures.
Oniha described the government’s bond market as very active, with a range of instruments like Treasury bills, Federal Government Bonds, Savings Bonds, and Sukuk issued regularly.
The DMO DG, who sounded upbeat about the success of the N300 billion Sukuk following the success trajectory of the previous ones, said: “There’s something for everyone. Whether you are a large institutional investor or a salary earner, there’s an appropriate investment product available. And this variety also means the government is not dependent on one single funding source.”
The domestic debt instruments, she stated, have long tenors — some spanning up to 30 years—and are a key component of the country’s funding strategy.
She disclosed that over 70 per cent of Nigeria’s domestic debt was issued by the federal government.
Commenting on Nigeria’s debt profile, Oniha stated that while the debt-to-GDP ratio has crossed 50 per cent, it still remains within acceptable limits prescribed by international benchmarks, including those of the IMF, World Bank, and ECOWAS.
“Public debt sustainability is not just about the size of the debt. It’s about growing revenues and expanding the GDP,” she said.
