- The Federal Government of Nigeria successfully issued a N100 billion Sovereign Sukuk in December 2018. The Offer was oversubscribed to the tune of N132.2 billion or 132.2%.
- The Offer was opened to the general public and Subscriptions were received from a wide range of investors: Retail Investors, Pension Fund Administrators, Deposit Money Banks, Fund Managers and Non-Bank Financial Institutions and Other Institutional Investors (Table I). An indication of the wide acceptance of the financing product.
|TABLE 1: FGN N100 BILLION SOVEREIGN SUKUK INVESTOR DISTRIBTUION|
|INVESTOR CATEGORY||AMOUNT (NAIRA)||PERCENTAGE|
|PENSION FUND ADMINISTRATORS||40,692,000,000||40.69|
|DEPOSIT MONEY BANKS||17,500,000,000||17.50|
|FUND MANAGERS & NON-BANK FINANCIAL INSTITUTIONS||11,652,602,500||11.65|
|NON-INTEREST BANKS/ETHICAL FUNDS||10,943,701,500||10.94|
|OTHER INSTITUTIONS INVESTORS||1,885,285,000||1.89|
- The significant increase in the level of participation by Retail Investors from about 4% in the debut Issuance in 2017 to 17.33% in 2018 means that the objectives of financial inclusion and deepening of the Investor Base of FGN Securities are gradually being achieved. A total of 1876 Retail Investors participated in the Sukuk Issuance.
- Proceeds will be used to further support government capital spending for 2018 – the construction and rehabilitation of Twenty- Eight (28) key economic roads across the six (6) geo-political zones of the country. Each of the Zones has equal allocation of N16.67 billion. The roads will ease commuting, spur economic activities across the country and further close our infrastructural gap.
- The Sukuk funding option is part of the initiatives of the government to: diversify government funding sources, while also deepening the Nigerian capital market, mobilising more savings and promoting financial inclusion.
- The use of proceeds of the Issuance has an in-built investor protection mechanism in two forms:
ü The Trustees (FBNQuest Trustees Limited and STL Trustees Limited) both registered by Securities & Exchange Commission will monitor the disbursement of the Sukuk Proceeds.
ü The Sukuk Proceeds have been ring-fenced in a dedicated account at the Central Bank of Nigeria to ensure that they are utilised only for the Road Projects.
- The funds will be released to the Federal Ministry of Power, Works & Housing based on the framework agreed with the Trustees in order to ensure transparency and accountability in the use of proceeds.
January 10, 2019