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Sukuk bond: No Plan to Islamise Nigeria, Says FG

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  • Sukuk bond: No Plan to Islamise Nigeria, Says FG

The Federal Government has said that there is no plan to Islamise the country with the recent issuance of its N100bn Sukuk bond.

The Minister of Finance, Mrs. Kemi Adeosun, said this on the sidelines of an investor conference organised by Stanbic IBTC Bank in Lagos.

Offer for subscription for the Sukuk bond closed on Friday.

Adeosun stated that several countries of the world including South Africa had issued sukuk bonds in the past, and Nigeria’s plan to issue the sukuk bond started about six years ago, long before the current administration came into power.

According to her, the sukuk bond is among the many products being introduced by the current administration to deepen the country’s financial market.

The minister explained that the sukuk bond would enable the Federal Government to bring several investors into its dragnet as it stepped up efforts to raise the funds needed for infrastructure growth and development, among other projects.

Adeosun said, ‘’Sukuk is part of our programme to deepen the financial market. Interestingly, it predated us. The committee started work in 2011. So, they have been working on it for six years, to structure products that would be compliant. Really, the Sukuk is about two things -one is about raising money and deepening the financial market.

“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 that 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. So, there is no religious driver behind it. It is really a financial product to meet financial needs.

She added, “This particular one of N100bn is going to be used for road projects. 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.

The minister said not every investor wanted to put their money into regular bonds and Treasury bills and, as such, there was the need to get everyone on board.

On concerns that the funds raised from Sukuk must be used for Sharia-compliant activities strictly, the minister said, “That is part of what is called the ethical investment. A lot of people for example, don’t want their funds invested in particular items such breweries, among others.

“Funny, a lot of investors that we have been marketing the bond to are just looking at the yield. So, it is really just another product which we hope would deepen the market and bring more people in. Not everybody wants to do bond or treasury bills. And we are still going to bring out many more products.”

Adeosun said the N100bn sukuk bond, which closed on Friday, had received wide acceptance in the investor community, adding that the response had been, “very positive and we are very confident that it would be fully subscribed.”

The Christian Association of Nigeria had last Tuesday opposed the floating of the Sukuk Islamic bond by the Federal Government, alleging it was meant to Islamise the country through the back door.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market.

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Economy

We Are Losing N13.9bn Monthly Because FG Caps Tariff – Discos

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Discos Says it is Losing N14bn Monthly Because of NERC Capped Tariff

The Nigerian power Distribution Companies (Discos) have said they a losing N13.9 billion in revenue every month because the Nigerian Electricity Regulatory Commission, limited how much they can charge for consumption.

Ernest Mupwaya, the Managing Director, Abuja Electricity Distribution Company, made the statement during a presentation on behalf of the Discos to the House of Representatives Committee on Power.

The statement was after the Discos demanded realistic indices before the implementation of the proposed service reflective tariff, which was supposed to be implemented on July 1.

Mupwaya said there were some outstanding requirements before the service reflective tariff could be implemented.

“One of them is the removal of estimated billing caps. The financial impact of the Capping Order is an average loss of N13.9bn monthly, thereby, undermining or jeopardising the minimum remittance requirement,” Mupwaya stated.

The July 1 service tariff implementation was halted by members of the National Assembly, who prevailed on the Discos to shelve the date to the first quarter of 2021 due to the current economic challenges in Nigeria.

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Gbajabiamila Says Nigeria Can’t Compete in AfCFTA With Weak Industries

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Nigeria Must Ramp up Industrialisation to Prevent Dumping by Other Nations

The Speaker of the House of Representatives, Femi Gbajabiamila, has said the nation can not compete effectively in the African Continental Free Trade Area (AfCFTA) with weak industrialisation and manufacturing activities.

Gbajabiamila disclosed this while receiving Adesoji Adesugba, the newly appointed Managing Director of the Nigeria Export Processing Zones Authority.

The details of the visit were made public on Thursday in a statement titled, “AFCFTA: House Speaker tasks Nigeria on industrialisation through free trade zones.”

Gbajabiamila was quoted as saying “We must act proactively so that we don’t become a dumping ground for other African nations.

“Our best option in this circumstance is to immediately set machinery in motion to ensure the effective functioning and flourishing of our export processing zones.

“We must remove all bottlenecks and perfect all stumbling blocks. We will then be fully prepared for AfCFTA and also generate massive jobs for our unemployed youths and enhance our foreign earnings.”

He added that the nation must as a matter of national emergency ramp up industrialisation through free trade zones and other effective means to compete with South Africa, Africa’s most industrialised economy and other African nations.

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FG Marches Forward With Zero Subsidy Plan

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FG Says Its Done With Fuel Subsidy After Years of Wasted Resources

The Federal Government through the Ministry of Petroleum Resources said there is no going back on zero-subsidy.

According to a statement released on Thursday by the Minister of State for Petroleum Resources, Timipre Sylva, the Federal Government can no longer bear the burden of petrol subsidy.

In the statement titled ‘Deregulation: The facts and the reasons behind the policy’, the minister said “After a thorough examination of the economics of subsidising PMS for domestic consumption, the Federal Government concluded that it was unrealistic to continue with the burden of subsidising PMS to the tune of trillions of naira every year, more so when this subsidy was benefiting in large part the rich, rather than the poor and ordinary Nigerians,” he said.

Sylva explained that it simply means that the government will not be the sole supplier of petroleum products but will now encourage the private sector to get involved in the business.

“This means also that market forces will henceforth determine the prices at the pump. In line with global best practices, the government will continue to play its traditional role of regulation to ensure that this strategic commodity is not priced arbitrarily by private sector suppliers,” Sylva said.

The minister likened the regulatory function to the role of the Central Bank in the banking sector, “ensuring that commercial banks do not charge arbitrary interest rates”.

Sylva said, “Petroleum products are refined from crude oil. Therefore, the price of crude (the feedstock) for the refining process will affect the price of the refined product.

“When crude oil prices were down, government, through its regulatory functions, ensured that the benefits of lower crude oil prices were enjoyed by Nigerians by ensuring that PMS was lowered. At that time, we indicated that an increase in crude oil prices will also reflect at the pump.”

He said one of the reasons Nigeria has not been able to attract enough investment into the refining industry was because of the burden of fuel subsidy.

Sylva said, “We need to free up that investment space so that what happened in the banking sector, aviation sector and other sectors can happen in the midstream and downstream oil sector.

“We can no longer avoid the inevitable and expect the impossible to continue. There was no time government promised to reduce pump price and keep it permanently low.”

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