KEY POINTS
- Nigeria approves $2.2 billion external borrowing initiative to strengthen fiscal stability through Eurobond and Sukuk offerings.
- N400 billion Real Estate Investment Fund launched to address Nigeria’s 22-million-unit housing deficit and stimulate job creation.
- The initiatives align with President Tinubu’s economic recovery strategy, focusing on fiscal stability, local production, and housing development.
Nigeria’s Federal Executive Council has approved a $2.2 billion foreign borrowing initiative under the 2024 Appropriation Act, as confirmed by the Finance Minister, Wale Edun. The plan, unveiled on Thursday, aims to enhance the nation’s fiscal health through a combination of Eurobond and Sukuk offerings.
Edun, speaking after the council’s meeting at the Aso Rock Villa in Abuja, detailed that the borrowing package consists of $1.7 billion in Eurobonds and $500 million in Sukuk. He highlighted that the country’s ongoing economic reforms have significantly improved its eligibility for accessing international capital markets.
“The structure and timing of the borrowing will depend on market conditions and the advice of our transaction advisors. Approval from the National Assembly is also a vital step before proceeding,” Edun stated.
Strategic financing aligned with economic recovery
As reported by Punch, the finance minister emphasized that Nigeria’s earlier domestic bond issuances, which successfully attracted both local and foreign investors, proved the resilience of the country’s financial market. This external borrowing initiative, he explained, fits within President Tinubu’s broader economic strategy aimed at stabilizing macroeconomic conditions, recalibrating foreign exchange and fuel pricing, and boosting local production.
“Notable progress has been made, including the resumption of domestic petroleum refining in October, which is crucial for addressing long-standing macroeconomic imbalances,” Edun noted. He also reiterated that the borrowing initiative is essential to addressing fiscal deficits and driving sustainable economic growth.
N400 billion real estate fund to address housing crisis
In a related move, the government has approved a ₦400 billion Real Estate Investment Fund to combat Nigeria’s massive 22-million-unit housing deficit. Managed by the Ministry of Finance Incorporated (MOFI), the fund aims to overhaul the housing sector by offering affordable, long-term mortgages.
Initially capitalized with ₦150 billion in government funds, the MOFI-managed initiative seeks to attract long-term investors such as life insurers and pension funds. “This fund will stimulate the housing market, create jobs, and spur private sector investment, creating a ripple effect across the economy,” Edun stated.
The first phase of the initiative targets ₦250 billion for low-cost mortgages, with interest rates ranging between 11% and 12% and repayment periods extending up to 20 years. This contrasts sharply with current market conditions, where interest rates are near 30% and short loan tenures are common.
Catalyzing Economic Growth and Job Creation
“This initiative will ease the burden of homeownership for Nigerians and drive job creation while boosting economic growth,” Edun emphasized. He highlighted that the fund is a significant step toward fulfilling President Tinubu’s promise to enhance housing access and improve the standard of living for Nigerians.
Together, these two initiatives reflect the government’s dual commitment to fiscal sustainability and socioeconomic development, positioning Nigeria for robust and sustained growth in the future.
