The Minister of Power, Works and Housing, Mr Babatunde Fashola, and his counterpart in the Ministry of Finance, Mrs Zainab Ahmed, justified the increasing borrowing of the current administration since it came to power.
Speaking on behalf of the federal government, the ministers 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.
Justifying the N10.21tn increase in the country’s total debt since 2015, Fashola said the economy benefited in diverse ways when the government made an investment in infrastructure.
According to him, 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.”
On her part, Zainab 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.
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.
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.
The Debt Management Office confirmed that the fund would be used to construct a total of 642.69 kilometres of road across the six geopolitical zones of the country, with each getting N16.67bn for different road projects ranging from three to six.