Niger State Plans To Raise N25 Bln Sukuk Bonds To Fund Road Projects
Niger State government plans to raise N25 billion through the issuance of Islamic financial instruments, Sukuk bonds with 7-year tenor to finance some infrastructural development in the state.
The state lawmakers gave their consent to the government to borrow the fund after delibrations on the request by the governor Abubakar Bello.
The governor Abubakar Bello said the bond will carry not more than 7-year tenor and said the proceeds of the bond will be spent to execute some road projects totaling 235.19km.
In his letter to the house, the governor said he intends to take the bond because of its commitment to the objective of transforming the state.
“The government reviewed its capital intensive development projects and resolved in some high leveraged projects and high impactful visible projects.
“Thus, the government seeks to upgrade, construct and reconstruct some essential roads as well.
“The capital intensive projects which require long term funding will mostly be funded through a N25 billion infrastructure development Sukuk Bond programme
“The letter further stated that the bond would be issued in two tranches of N15 billion and N10 billion consecutively,” it added
In his first term, the governor had requested the previous Assembly to approve similar borrowing of N21.5 billion through Sukuk bond but the request was denied due to what the legislators termed “hidden high costs”.
Sukuk is the Arabic name for financial certificates, also commonly referred to as “sharia compliant” bonds.
Sukuk are defined as “securities of equal denomination representing individual ownership interests in a portfolio of eligible existing or future assets.”
Niger will be following the footsteps of Osun, which was the first subnational to raise Sukuk bond to fund developmental projects.
Nigeria is also planning to issue about N150 billion Sukuk bond this year to finance some road projects across the country.
The planned issuance will be the third series of such Islamic bond sales by the federal government as it currently owed an outstanding N200 billion from the previous issuance.