Abuja, Nigeria – November 14, 2024 – The Federal Executive Council (FEC), in its latest meeting, has granted approval for a $2.2 billion external borrowing programme to aid the federal government’s efforts in addressing its financial needs and supporting its ongoing economic recovery initiatives.
The announcement was made by Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, following the FEC meeting on Wednesday. According to Edun, the decision marks a significant step in the government’s broader borrowing strategy, which will include issuing Eurobonds and Sukuk bonds in the international capital markets.
Breakdown of the Financing Programme
The approved $2.2 billion financing programme consists of:
- $1.7 billion through Eurobonds: A common debt instrument issued by sovereign governments, allowing access to global capital markets.
- $500 million via Sukuk financing: A Sharia-compliant debt instrument that is increasingly used in emerging markets to raise funds.
Edun explained that the final composition of the borrowing package—whether it will be exclusively Eurobonds, Sukuk, or a combination of both—will depend on market conditions at the time of execution. The plan now moves to the National Assembly for approval, after which the borrowing process will be finalized.
Timeline and Execution
Once the National Assembly approves the borrowing programme, the federal government intends to execute the plan as soon as possible, likely within the current year. This quick timeline highlights the urgency of meeting the government’s fiscal requirements to support ongoing projects and economic recovery efforts.
Market Conditions and Confidence
Minister Edun also highlighted the resilience and sophistication of Nigeria’s financial markets, citing the successful domestic issuance of dollar bonds earlier this year. This success, he noted, is a strong indicator of investor confidence in the country’s macroeconomic policies under the leadership of President Bola Tinubu.
He expressed optimism that Nigeria would be able to access the international capital markets without difficulty, reinforcing the country’s standing as a credible borrower on the global stage.
Broader Economic Impact and Strategic Investments
In addition to the borrowing plan, FEC also approved the creation of the Morph Real Estate Investment Fund. This N250 billion fund is designed to address Nigeria’s critical housing deficit—currently estimated at 22 million units—by providing low-cost, long-term mortgages to Nigerians seeking to acquire homes.
Edun emphasized that the fund would not only contribute to reducing the housing deficit but also stimulate economic growth by encouraging private-sector investment in the housing construction industry. He noted that this initiative would create significant employment opportunities and knock-on effects throughout the economy.
The $2.2 billion external borrowing plan and the creation of the Morph Real Estate Investment Fund are key components of the federal government’s strategy to strengthen Nigeria’s economic foundation, address infrastructure deficits, and stimulate private-sector participation in critical sectors like housing.
With both initiatives, the government is taking steps to balance short-term fiscal needs with long-term economic growth, all while ensuring the country’s continued integration into the global financial system. However, the execution of these strategies will depend on effective management of debt and a clear commitment to sustainable fiscal policies, particularly as Nigeria grapples with ongoing budget deficits and rising debt levels.
