The Federal Executive Council has approved fresh external borrowing of $2.2b, made up of $1.7b and SUKUK financing of $500M.
This approval is to strengthen the country’s finances and enhance economic reforms.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, made this known on Thursday after the Executive Council meeting on Thursday, presided over by President Bola Tinubu at the Council Chamber, State House.
Mr. Edun who stated that he submitted two memos disclosed that the external borrowing approval when finally given by the National Assembly will grant Nigeria access to the international capital market for some combination of the Euro bond and SUKUK financing.
“And the first one was to complete the borrowing program of the federal government in terms of the external borrowing with the approval of the $2.2 billion financing program made up of access to the international capital market for some combination of the Euro bond offer and the Sukuk bond offer. Perhaps a Euro bond of about $1.7 billion and Sukuk financing of another $500 million is the actual makeup of the financing which will be done as soon as the National Assembly has considered.”
He added that Nigeria had showcased the resilience of its financial markets, capacity, and increased complexity through the domestic issuance of dollar bonds which according to him attracted Nigerian investors.
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Edun stressed that for Nigeria being able to access the international capital market is an indication of the nation’s acceptance and support for President Bola Tinubu’s macro-economic programmes.
“This being able to access the international capital market is also a sign of the acceptance and the support for the macroeconomic program of Mr. President and indeed his entire administration. As we know the economic program, that economic recovery and revival program to turn around the economy, is focused on macroeconomics the macroeconomic pillars of market pricing of the PMS and market pricing of foreign exchange.”
He added that the approval was part of the Nigerian 2024 Appropriation Act as amended.
Real Estate Investment Fund
In addition to the borrowing approval, the Minister of Finance disclosed that the council also endorsed the creation of a N250 billion real estate investment fund, which aims to tackle Nigeria’s 22 million housing deficit and provide long-term, affordable mortgage financing for Nigerians.
According to Edun, 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%, 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,” the Minister added.
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