The Federal Executive Council (FEC) has granted approval for a $2.2 billion financing programme to support the Federal Government’s external borrowing plan.
The decision was disclosed by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, following a briefing after Wednesday’s FEC meeting in Abuja.
Edun emphasized the significance of this approval as a critical part of the federal government’s borrowing strategy to meet financial needs and support its economic recovery efforts.
“We just had the Federal Executive Council meeting, and I am privileged to present two memoranda to the Federal Executive Council. The first one was to complete the borrowing programme of the Federal Government in terms of external borrowing with the approval of a $2.2 billion financing programme,” Edun said.
Eurobonds and Sukuk bonds
The proposed financing package will include access to the international capital market, specifically targeting the issuance of Eurobonds and Sukuk bonds.
” It is made up of access to the international capital market for some combination of the Euro bond offer and the Sukuk bond offer, and perhaps a Euro bond of about $1.7 billion.
“Sukuk financing of another $500 million the actual makeup of the financing which will be done as soon as the National Assembly has considered and hopefully approve the borrowing plan, “ Edun stated.
The Minister explained that the next step involves submitting the borrowing plan to the National Assembly for approval, after which the external borrowing will be finalized.
Edun confirmed that once approved, the borrowing will be executed as soon as possible, likely within this year.
“If the external borrowing approval is given, it will be done this year, as soon as possible after approval,” he stated.
Market conditions
- The composition of the financing instruments will depend on prevailing market conditions and the advice from financial advisors at the time of the decision.
- He explained that the actual combination of instruments that would be raised would depend on what the advisors would say about market conditions at the time of the decision to enter the market
- The Minister also reflected on the resilience of the Nigerian financial markets, particularly the success of the recent domestic issuance of dollar bonds, which demonstrated the market’s capacity and sophistication.
- He highlighted this as a positive sign of confidence in Nigeria’s macroeconomic policies under the leadership of President Bola Tinubu.
“Earlier in the year, we had shown the resilience of the Nigerian financial markets, and the depth of their capacity, the increased complexity and sophistication by having a domestic issuance of dollar bonds, which attracted Nigerian investors from far and wide
Likewise, being able to access the international capital market is also a sign of the acceptance and the support for the macroeconomic programmes of President Bola Tinubu-led administration,” he said.
More Insights
In addition to the borrowing programme, FEC approved the creation of the Morph Real Estate Investment Fund, which will be instrumental in addressing Nigeria’s housing deficit and fostering long-term mortgage financing.
“The Morph Real Estate Investment Fund is going to be, in the first instance, a N250 billion fund that will provide low-cost and long-term mortgages to Nigerians that want to acquire houses,” he said
The new real estate fund is expected to contribute significantly to alleviating the country’s housing deficit, which currently stands at 22 million units.
” It will help to complete or help to fill part of the gaping 22 million unit housing deficit,” he said.
This is a step towards revitalizing the housing sector, creating jobs, and stimulating economic growth. Additionally, the fund will pave the way for private-sector investors to participate in the housing construction industry.
“It will also pave the way for other investors in the private sector to come in and participate in the all-important housing construction industry with huge benefits and knock-on effects throughout the whole economy
“Long-term investors have the opportunity to earn market rates of interest on investment. This is going to be blended with seed funding of N150 billion,” Edun stated.
