Nigerian Government Seeks N250bn from Citizens this December for Road Projects, Full Repayment in 10 Years
- The Federal Government is looking to borrow N250 billion from Nigerians for development of road infrastructure across the country
- The money invested by Nigerians are backed by the full faith and credit of the Federal Government of Nigeria
- The principal amount borrowed to the government will be repaid in full in 10years at a rental income of 12.80 percent per annum
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The Debt Management Office (DMO) has opened offer for a new N250 billion Sovereign Sukuk bond on behalf of the Federal Government for road infrastructure across the country.
This bond, a fourth to be issued by the DMO as a tenure of ten (10) years at a rental income of 12.80 percent per annum, to be paid half-yearly.
Bonds are simply a term for loans that you give to the Federal Government, State Government, Companies.
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According to DMO the bond will be at N1,000 per unit subject to a minimum subscription of N10,000 and in multiples of N1,000 thereafter.
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The offer opens on Thursday, 16 December and will end on December 24, the settlement date being December 24, the Cable reports.
What DMO is saying
DMO hopes that institutions, people, associations, and cooperative societies would take advantage of the offer.
The revenues from the offer, DMO said will be utilized entirely for the development and rehabilitation of critical road projects across the country's six geopolitical zones.
A statement on its website reads:
“The impact of the Sovereign Sukuk on road infrastructure in terms of job creation, travel time, safety and movement of goods have made the Sukuk a beneficial financial instrument for financing economic growth and development.Sukuk bond
What is Sukuk bond
The DMO began issuing Sukuk in September 2017 as part of a strategic commitment to support infrastructural development, financial inclusion, and the development of the domestic securities market.
Following the N100 billion Sovereign Sukuk issued in 2017 to fund the rehabilitation and building of twenty-five (25) road projects across the six (6) geopolitical zones, the DMO issued another Sukuk for N100 billion in 2018 and another for N162.557 billion in 2020.
Likely questions from Nigerians
If I drop my money what will I get?
Nigerians who through issuing house decide to borrow the federal government, a piece of paper will be issued stating the amount borrowed and the tenor (no of years with which to repay), interest rate, and repayment period.
Can inflation eat up interest?
Yes, it is possible, but it is less likely if you want to hold to maturity(10 years). However, if you want to sell before that, you should expect it to be worth more or less as bond prices fluctuate based on economic conditions, just like stock prices.
Take for example you borrowed N10,000 it may be worth N11, 000 or N9, 000 when you sell it before the matured date.
It's like stocks: today it's high, tomorrow it's down.
However, the government must pay you the full face value at maturity (10 years).
China accounts for 81.98% of Nigeria's external debt
Legit.ng had earlier reported that the news of China taking over Uganda's Airport stirred heated reactions from Nigerians as many fear a similar fate awaits Nigeria.
Although details of Nigeria's agreement with China are publicly not available, DMO data shows Nigeria is indebted to five countries worth over N1 trillion.
As expected, China accounts for the highest debt stock by countries and the debts were obtained through bilateral agreements.
Source: Legit.ng
