Federal Executive Council (FEC) meeting presided over by President Bola Tinubu has approved a $2.2 billion external borrowing plan to strengthen the country’s finances and support economic reforms.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, explained that the financing package will be raised through a combination of Eurobonds and Sukuk bonds, with approximately $1.7 billion expected to come from the Eurobond offer and $500 million from Sukuk financing.
He added that the move aims at completing the federal government’s borrowing programme and will proceed once the National Assembly reviews and approves the plan.
The borrowing will occur within this fiscal year, and the ultimate funding arrangement will be decided by market conditions and transaction adviser advice.
“The first objective is to complete the federal government’s external borrowing program with the approval of the $2.2 billion financing package, which will include access to the international capital market through a combination of Eurobonds and Sukuk bonds—approximately $1.7 billion from the Eurobond offer and $500 million from Sukuk financing. The actual composition of the financing will be finalized once the National Assembly has considered and approved the borrowing plan. After the external borrowing approval is granted, the funds will be raised as soon as possible within the year.
“The exact combination of instruments will depend on the advice of transaction advisers and market conditions when we decide to enter the market.
“Earlier in the year, we demonstrated the resilience of the Nigerian financial markets and their capacity to handle more complex and sophisticated offerings, such as the domestic issuance of dollar bonds that attracted investors from both Nigeria and abroad.”
As an indication of increased trust in Nigeria’s economic recovery under President Tinubu’s administration, Edun emphasised the significance of the approval.
He used recent triumphs in issuing domestic dollar bonds that drew in both domestic and foreign investors to demonstrate the Nigerian financial market’s tenacity.
He added that this most recent overseas borrowing was made possible by the government’s economic agenda, which includes market-based pricing for important economic variables like foreign exchange and petroleum goods. Edun said in addition to approving the borrowing, the FEC also approved the establishment of a N250 billion real estate investment fund with the goal of addressing Nigeria’s housing shortage and offering long-term, reasonably priced mortgage finance to Nigerians.
According to him, the initiative will provide Nigerians with the opportunity to secure mortgages at interest rates significantly lower than the current market rates, which can exceed 30 percent with tenures that could extend up to 20 years or more.
“Approval has been granted for the Ministry of Finance Incorporated (MOFI) real estate investment fund. This fund will serve as the basis for the revival of long-term mortgage financing in the Nigerian economy.
“The MOFI Real Estate Investment Fund will initially amount to N250 billion and will provide low-cost, long-term mortgages to Nigerians who wish to acquire homes. It will help address part of the 22 million-unit housing deficit.
“Of course, it will create jobs, stimulate economic growth, and pave the way for other private sector investors to participate in the housing construction industry, with significant benefits for the broader economy.
“The concept is long-term. Investors will have the opportunity to earn market rates of interest and returns on investment, blended with seed funding of N150 billion.”
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