ABUJA - Nigeria will issue a sovereign Sukuk on its domestic market for up to 250 billion naira ($610 million) this year to finance road projects, the Debt Management Office (DMO) said on Tuesday.
The DMO issued a maiden 100 billion naira Sukuk four years ago to support road projects and deepen the local debt market. It has raised a total of 362.58 billion naira through the Islamic bond market.
President Muhammadu Buhari has made upgrading transport networks and investing in outdated power grids the pillar of his administration, with a view to boosting agriculture and other non-oil industries to cut dependence on dwindling crude revenues. But funding has been a major constraint.
Nigeria has been borrowing from both the local and international debt markets, and debt service is rising.
The West African country raised $4 billion via Eurobonds in September and is considering additional issues, subject to its budget limits.
It expects to increase spending in 2022, funded by new borrowings, proceeds from privatisations and drawdowns on loans secured for specific projects.
Nigeria, Africa's biggest economy, requires an estimated $1.5 trillion over a 10-year period to build up its infrastructure, Buhari said at Tuesday's climate change summit in Glasgow.
Nigeria is projected to grow by up to 3% this year after it expanded by 5% in the second quarter. Its economy contracted in 2020 due to the coronavirus pandemic, though it managed to exit recession in the fourth quarter, but growth is fragile.
($1 = 410.17 naira)
(Additional reporting by Felix Onuah Editing by David Goodman and Steve Orlofsky) ((email@example.com; +234 703 4180 621; Reuters Messaging: firstname.lastname@example.org))