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DMO: Financing infrastructure projects with Sukuk has created jobs for Nigerians

The Debt Management Office (DMO) claims that financing infrastructure projects with Sukuk has improved the living standards of Nigerians as well as the country’s economic growth.

Patience Oniha, Managing Director of DMO, speaking in a live interview on Arise TV on Thursday, added that it helps create jobs and scale small businesses.

Sukuk is an Islamic financial certificate (bond) that conforms to religious law known as Sharia.

Since the initiative’s inception in September 2017, DMO has issued four sovereign sukuks — 2017, 2018, 2020 and 2021 — to finance the construction of roads and bridges.

Earlier in the month, the DMO listing a 250 billion, 10-year, 13% Ijarah Sovereign Sukuk due 2031 on the Nigerian Exchange Limited.

Oniha said the listing of the Sukuk bond leaves room for transparency and liquidity.

“It gives room for liquidity, transparency and discovery. This is again one of the unique features of FGN titles. They are said to be liquid. You can buy it now. The content doesn’t matter. If you need to sell later, you can, and if you didn’t buy on show, you can still access the securities. This is an important aspect for investors,” she said.

“For the macro, the listing of securities on the two exchanges we have in Nigeria helps to boost the overall business and size of the two exchanges, which is important when countries are assessed and reviewed.”

She said one of Nigeria’s current challenges is “infrastructure – particularly in electricity, roads or rail”.

“As you know we have issued around 612 billion naira so far but what we are listing is the last one which was issued in September last year. In each of the four cases, we have invested in roads and bridges. They have transformed the environment they are in,” Oniha said.

“They created jobs because contractors went back to work knowing they would be paid, and those who dropped out of projects started working quickly because it showed that once you do your job, you are paid.

“So there was employment and then business that you quickly found around a building site – small businesses selling stuff; which also took off.

“But at the micro level, when you invest in infrastructure, it not only improves the quality of life, but makes your country more productive for investors – whether domestic or external. Overall, your gross domestic product ( GDP) will increase.

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