London, Jan. 11, 2019 (AltAfrica)-Amidst concern over effect of growing external debt, the Federal Government of Nigeria on Thursday said that it was necessary to continue to borrow in order to invest in infrastructure after the country failed to invest in it when there were heavy revenues from the sale of crude oil.

Minister of Power, Works and Housing, Mr Babatunde Fashola, and his counterpart in the Ministry of Finance, Mrs Zainab Ahmed, justified the borrowing which had been condemned in some quarters as excessive

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Fashola, said that the economy benefited in diverse ways when the government made an investment in infrastructure.

The clarification comes after media reports that Nigeria’s total debt stood at N22.43tn as of September 30, 2018.

As of June 30, 2015, the country’s total debt stood at N12.12tn. This means that within the tenure of the present administration which came to power on May 29, 2015, the country’s total debt has risen by N10.31tn or 85.06 per cent.

According to Fashola, borrowing does not only enable the government to finance critical infrastructure but also to power other aspects of the economy.

He said, “For those who ask: why are we borrowing? We are borrowing to build assets that will last us over 30 years which if we wait will be more expensive to build.

“More importantly, where is the money going? As soon as I collect this cheque, I am going to give it to the contractors. But even the contractors can’t keep it. They have to give it to their suppliers because they need quarry materials; they need bitumen; they need iron rods; they need cement; they need tyres; they need diesel.

“When this money moves, it is going to the miners to produce building materials and construction materials. It is going to the steel company to produce steel. Who are the people that will also benefit from it? Again, the banks are going to benefit.

“As the money is being lodged and moved out, charges are being made. So, the whole economy benefits from this. In closing, the manufacturers of bitumen are waiting. The manufacturers of cement and steel are waiting. This is how building drives an economy.

“Of course, the most important for us are the people we ignore as a nation – builders, artisans, labourers. They are also waiting. We can’t wait to receive the money because this is dry weather.”

Ahmed clarified that the N100bn Sukuk funds would be used to further support the government’s capital spending on road projects already captured in the 2018 budget.

Giving a breakdown of investors’ contribution to the funds raised, she said 40.69 per cent came from Pension Fund Administrators, 17.5 per cent from Deposit Money Banks and 17.33 per cent from retail investors.

Also, she said that 11.65 per cent came from fund managers and non-bank financial institutions, 10.94 per cent from non-interest banks and 1.89 per cent of the fund came from other investors.

She expressed gratitude to investors who had bought into the government’s programme by investing their resources in the Sukuk fund issued by the Federal Government.

She said, “There is for us a clear indication of the acceptance of this finance product. The significant increase in the level of participation by retail investors moved from about four per cent in the last issuance to 17 per cent in this current issue.

“This means that the Federal Government’s objective of financial inclusion is deepening. We now have a wider base of Federal Government securities and this is on the upward trend. Let me just say that we had specifically 1,876 retail investors that participated in this particular Sukuk issuance.”

Information released by the Debt Management Office showed that the fund would be used to construct a total of 642.69 kilometres of road across the six geopolitical zones of the country.

Each of the six zones got N16.67bn for different road projects ranging from three to six.

Such projects include the dualisation of Lokoja – Benin Road; the dualisation of Abuja – Lokoja Road; the reconstruction of Benin – Shagamu Road; the dualisation of Kano – Maiduguri Road; the dualisation of Oyo – Ogbomosho Road; the rehabilitation of Onitsha – Enugu Road and the rehabilitation of Enugu – Port Harcourt Road.