The Nigerian government has approved a fresh external borrowing plan totalling $2.2 billion, comprising $1.7 billion from the Eurobond market and $500 million through SUKUK financing.
The approval was announced on Thursday by finance minister Wale Edun, following the Federal Executive Council meeting chaired by President Bola Tinubu.
According to Mr Edun, the $2.2 billion borrowing plan includes $1.7 billion in Eurobonds and $500 million in SUKUK, pending National Assembly approval.
“And the first one was to complete the borrowing programme of the federal government in terms of the external borrowing with the approval of the $2.2 billion financing program made up of access to the international capital market for some combination of the Euro bond offer and the Sukuk bond offer. Perhaps a Euro bond of about $1.7 billion and Sukuk financing of another $500 million is the actual makeup of the financing which will be done as soon as the National Assembly has considered,” Mr Edun said.
Sukuk is an Islamic financial certificate that represents a portion of ownership in a portfolio of eligible existing or future assets. It is considered as an Islamic version of bonds, with the lender having direct asset ownership interest.
Rising Debt
According to the Debt Management Office (DMO), Nigeria’s total public debt stood at ₦121.67 trillion ($91.46 billion) as of March 2024, comprising both domestic and external obligations.
The minister claimed Nigeria’s recent success in raising funds through domestic issuance of dollar bonds, underscores the resilience of the country’s financial markets and demonstrates confidence in the administration’s macroeconomic policies.
“Securing access to the international capital market is a testament to the credibility of President Tinubu’s economic recovery programme. This programme focuses on key macroeconomic pillars, including market-driven pricing for petroleum products and foreign exchange,” Mr Edun added.
The borrowing is part of the government’s 2024 Appropriation Act.
N250 billion Real Estate Investment Fund
The cabinet also approved the establishment of a N250 billion Real Estate Investment Fund under the Ministry of Finance Incorporated. The fund aims to address Nigeria’s critical housing deficit, currently estimated at 22 million units, by providing long-term, affordable mortgage financing to Nigerians.
The minister said the fund will offer mortgage loans at significantly lower interest rates compared to prevailing market rates, which often exceed 30%. These loans will have extended tenures of up to 20 years or more, making homeownership more accessible.
“This initiative represents a significant step toward revitalizing the mortgage finance sector. The MOFI Real Estate Investment Fund will kick off with N250 billion, offering low-cost mortgages to Nigerians and helping to bridge the housing gap,” Mr Edun said.
He added that the fund is expected to create jobs, stimulate economic growth, and attract private sector participation in the housing industry.
Mr Edun said the fund will be seeded with N150 billion, supplemented by investments from the private sector. Investors in the fund will earn competitive returns, further encouraging participation in the housing finance ecosystem.
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