New Telegraph

FG Eyes $2.9BN Islamic Finance Window for Infrastructure Devt

There are indications that the Federal Government may adopt the non-interest finance window as a means of financing key infrastructural needs of the economy including green projects. This is coming just as the Islamic finance segment of Nigeria’s financial industry is said to have grossed $2.9 billion as at end of 2022. Findings revealed that the government is taking advantage of huge funds available in the non-interest segment of the capital market as a viable means of financing green sustainable growth of the country in line with the agenda of President Bola Tinubu’s administration.

Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, dropped the hint yesterday in Abuja at the international forum on strengthening development of the non-Interest finance segment in Nigeria. The event was jointly organised by Securities and Exchange Commission (SEC) and Islamic Financial Services Board of Malaysia. Edun was part of Federal Government’s delegation led by President Tinubu that attended COP 28, which held in Dubai last week.

Government’s renewed interest in adopting non-interest finance window for green projects is deepened by the utilisation of Sukuk by Debt Management Office (DMO) in 2017 to rehabilitate and construct roads in the six geo – political zones of the country. DMO has raised almost N1.0 trillion to finance over 5,000 kilometers of critical roads and bridges with all such issuances oversubscribed. According to Edun, “there is debt crisis in global south and the answer is equity.

The answer is financing mechanisms that will now have to bear interest rather, you will have participatory opportunity that equity finance gives and non-interest finance gives. “What we are saying here is the critical part of the solution of the crisis of the world currently, including rapid inclusive growth. That is the agenda of President Bola Ahmed Tinubu.

You need to have green projects. You need not only to have projects funded by equity, but as you all know, our debt service to revenue ratio is constrained.” “There is fiscal exhaustion in many parts of the world, and there is also a need to finance green projects. So that the way to grow the economy not just relying on foreign direct investments, but domestic investment that is green.

“The key conversation that we’ve had in the last few days (Dubai COP28) is not just about people investing in equity, in reforestation projects,” he said. Edun, who delved further into thrust of meetings Nigeria’s delegation to last week climate change in Dubai, said finance options for critical projects arising from the Summit would be in line with the global climate action agenda.

“Another important conversation is regarding the production of electric vehicles in Nigeria, electric buses, mass transit vehicles in Nigeria. Most of those trans- actions are the ones that are not only green but in line with the agenda of the day.

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