Federal Gov’t To Borrow Fresh $2.2bn To Support Economic Recovery

The federal government has approved a $2.2billion external borrowing plan to strengthen the country’s finances and support economic reforms.

Minister of Finance, Wale Edun, disclosed this to State House correspondents on Thursday after the federal executive council (FEC) meeting presided over by President Bola Tinubu at the Presidential Villa.

According to him, the financing package will be raised through a combination of Eurobonds and Sukuk bonds, with approximately $1.7 billion expected to come from the Eurobond offer and $500 million from Sukuk financing.

He said the move was aimed at completing the federal government’s borrowing programme and will proceed once the National Assembly reviews and approves the plan.

Edun said the borrowing will take place within the 2024 fiscal year, with the final structure of the funding to be determined by market conditions and the recommendations of transaction advisers.

He said, “The first objective is to complete the federal government’s external borrowing program with the approval of the $2.2 billion financing package, which will include access to the international capital market through a combination of Eurobonds and Sukuk bonds—approximately $1.7 billion from the Eurobond offer and $500 million from Sukuk financing.

“The actual composition of the financing will be finalized once the National Assembly has considered and approved the borrowing plan. After the external borrowing approval is granted, the funds will be raised as soon as possible within the year.

“The exact combination of instruments will depend on the advice of transaction advisers and market conditions when we decide to enter the market.

“Earlier in the year, we demonstrated the resilience of the Nigerian financial markets and their capacity to handle more complex and sophisticated offerings, such as the domestic issuance of dollar bonds that attracted investors from both Nigeria and abroad.”

Edun underscored the importance of the approval as a sign of growing confidence in Nigeria’s economic recovery under President Bola Tinubu’s administration.

He highlighted the resilience of the Nigerian financial market, citing recent successes in domestic dollar bond issuances that attracted both local and international investors.

He further explained that the government’s economic programme, which includes market-based pricing for key economic variables like petroleum products and foreign exchange, has paved the way for this latest international borrowing.

In addition to the borrowing approval, Edun disclosed that FEC also endorsed the creation of a N250 billion real estate investment fund, which aims to tackle Nigeria’s 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.

He said, “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.”