The Director General of the Debt Management Office, Mrs Patience Oniha has given what may better be described as a word of commendation to non interest banking, saying its benefits are wide and varied.
Oniha spoke on the sidelines of the Islamic Finance News (IFN) Forum in Lagos on Tuesday.
Fielding questions from journalists, on the outcome of the sukuk bond, which is one of the innovative non interests banking under Islamic finance, from which the federal government raised funds from the public to finance major road infrastructure across the country, the DMO boss said the success rate of the instrument is high.
Specifically, she said the government had proposed to sell just about a hundred billion worth of the bond in 2017, but sold over hundred billion. The same feat was replicated in 2018, she said.
“In 2017, we proposed N100billion but recorded N104billion. In 2018, we offered N100billion and was able to raise N132billion,” she recalled.
Upbeat, she said, “The success rate of the non interest banking as far as the sukuk instrument is concerned, was a huge success. In the two times we went to the public it was oversubscribed. That tells you that the finance window is gaining acceptance so there is no question about whether it is good or not. It’s the way to go. When you have a working formula, you can only step up efforts.”
Pressed further, the DMO boss stressed that what needs to be done is to increase the level of awareness about non interest banking instruments, especially amongst the financially excluded in order to expand its reach.
Sukuk, she emphasised,”Has become a veritable tool for financing infrastructure which has several multiplier effects including job creation and boosting economic activities. In addition to being a viable tool for financing infrastructure, the Sovereign Sukuk promotes financial inclusion and the development of the domestic financial markets.”
The forum organised by Redmoney Event in collaboration with the Nigerian Stock Exchange drew participants from the banking and financial services sector, public and the organised private sector.
The IFN Forum is devoted to providing awareness and advocacy for non interest banking and other financial services.
It would be recalled that the Federal Government last December, issued a seven-year N100 billion Sovereign Sukuk (15.743% N100BN Al Ijarah Sukuk due 2025)as part of the New Domestic Borrowing in the 2018 Budget to finance road projects. The offer attracted significant interest from a wide range of retail and institutional investors with a Total Subscription of N132.20 billion, which represents a subscription rate of 132.2%.
Retail Investors accounted for 17.33% of the Total Allotment compared to 4% recorded in the debut Issuance, indicating that the stated objectives of financial inclusion and deepening of the investor base for FGN securities, in addition to infrastructure funding are being achieved.