Kemi Adeosun has signaled that government could increase its borrowing to even higher levels as it struggles to meet its obligations. The Finance Minister gave this hint while speaking with journalists during the Stanbic Ibtc investor conference held recently in Lagos.
“We need to include many people in the market to raise the money that is needed for infrastructure. We have already introduced the savings bond which is for small investors.
“They were saying the process of getting into government securities was too complex, so we made the product for them. And this is another product. We have other products that we are coming up with,” she said.
Adeosun also sought to allay fears that the Sukuk bond had a hidden agenda as alleged by some Christian associations.
“We have identified the road projects that it is going to be tied to and there is no religious attachment to it. South Africa even did a sovereign Sukuk before Nigeria. So, there is no Islamisation agenda at all.”
Some analysts have however expressed worry about the high level of borrowing by the government, which has crowded out the private sector. Data from the recent treasury auction held by the government last week show the government sold N215.89 billion worth of bills, higher than the N140 billion stated in the calendar for the fourth quarter of 2017.
Commercial banks rather than lend to the private sector, prefer to invest funds in treasury bills which have a risk free return of almost 17%. Businesses in the country are thus left to borrow at interest rates between 25-30%. Data from the CBN shows credit to the public sector is at an all time high. A drop in crude oil prices and production volumes last year pushed the economy into recession and left all tiers of government struggling to meet their obligations.