Nigeria Govt Eyes Non-Interest Finance Window for Key Infrastructure Projects

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In a significant financial development, Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, revealed on Wednesday the government’s contemplation of implementing a non-interest finance window for financing crucial infrastructure and green projects. Edun emphasized the urgency of adopting non-interest financing to address Nigeria’s escalating debt crisis, highlighting its potential to unlock substantial economic opportunities and reduce reliance on traditional borrowing methods.

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Speaking at the 1st Securities Exchange Commission (SEC) Nigeria-Islamic Financial Services Board (IFSB) International Forum on Non-interest Capital Markets in Abuja, Edun underscored the strategic importance of this decision in the context of the government’s participation in COP28 in Dubai, UAE. He advocated for alternative financing mechanisms based on equity participation rather than interest, emphasizing their critical role in addressing the global debt crisis and fostering rapid, inclusive growth.

Edun drew attention to the high revenue-to-debt service ratio, fiscal exhaustion in various parts of the world, and the imperative to explore equity-based financing mechanisms. He stressed the significance of non-interest financing, providing participatory opportunities that align with the equity and non-interest financing principles.

Highlighting the necessity of financing green projects and reducing dependence on foreign direct investment, Edun cited examples such as the production of electric vehicles and mass transit vehicles, aligning with the global climate action agenda.

Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), reiterated the apex bank’s support for key stakeholders in the non-interest banking ecosystem, aligning efforts with President Tinubu’s proposal to build a one trillion-dollar economy.

Lamido Yuguda, Director-General of the SEC, acknowledged the vast opportunities in the Islamic financial market but expressed regret over Nigeria’s underutilization of this economic potential. He emphasized the transformative growth of the non-interest capital market and its pivotal role in the country’s economic development.

Yuguda advocated for the use of Sukuk, a non-interest capital market instrument, for infrastructure financing, citing its asset-backed arrangement that allows issuers to clear their balance sheets of debt. He encouraged corporates and governments to explore Sukuk as an alternative mode of financing, particularly in the face of a high debt-service to revenue ratio.

Bello Lawal Dambatta, Secretary-General of the Islamic Financial Services Board, spoke on the alignment between non-interest finance and public-private partnerships in the infrastructure sector. He emphasized the flexibility of the non-interest finance window, its diverse structures, and the need to transition towards climate and sustainable finance principles for green and inclusive economic growth.

Gbenga Samson
Gbenga Samsonhttp://ThisDayLive.com
Samson Gbenga Salau [Editorial Board Adviser] Gbenga Samuel Salau is a professional journalist with over 17 years experience in journalism, he is a graduate of Communication and Language Arts, University of Ibadan. On completion of his youth service, he joined The Guardian as a freelance journalist and was later absorbed as a staff. While in the University, he was a campus journalist reporting for the Independence Hall and Faculty of Arts Press Clubs. As a campus journalist, he won the following awards; Independence Hall Press Best News writer; University of Ibadan Union of Campus Journalists’ Best News Reporter/Writer; First Runner-up, Reuben Abati Award for Investigative Journalism; Association of Faculty of Arts Students’ Press Best Reporter; University of Ibadan Union of Campus Journalists’ Best Political Writer; Winner, Reuben Abati Award for Investigative Journalism, and University of Ibadan Union of Campus Journalists’ Best Interviewer. He served the Association of Communication and Language Arts Students, as the Public Relation Officer, the same year he was appointed the News Editor of the Association of Faculty of Arts Students Press. The following session, he was made the General Editor, and a member of the 13-man University of Ibadan Students’ Union Transition Committee. As a reporter in The Guardian, in 2014, he won the Promasidor Quill Award Best Report on Nutrition and DAME Business Reporting category. In the 2015 edition of the Promasidor Quill Award, he won the best Report on Nutrition and Brand Advocate Categories, while in 2016, he won the NMMA Print Journalist of the Year, first runner-up Golden Pen Reporter of the Year and SERAs CSR Awards. Gbenga Salau loves traveling, reading, and listening to songs with good lyrics no matter the genre.

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