Uwaleke Prescribes Project-tied Sukuk to Build Public Trust in Government Borrowing.
Uche Uwaleke has advised that rather than a complete resort to conventional loans, the federal government should undertake a serious assessment of the proportion of its proposed infrastructure financing that can be mobilised through international Sukuk.
He stated that one of Sukuk’s appeal lies in its potential to strengthen transparency and accountability in the utilisation of public borrowing.
He said the controversial $20.52 billion and €1.045 billion external borrowing move should provide an opportunity for a fundamental rethink of the country’s financing strategy.
In an article titled “Rebuilding Public Trust in Government Borrowing: The Case for Scaling Up Sukuk Financing in Nigeria,” Uwaleke said the recent request by President Bola Tinubu to the National Assembly for approval to raise $20.52 billion and €1.045 billion in fresh external loans had once again brought Nigeria’s growing public debt burden into sharp focus. The financial expert who is also heads the Institute of Capital Market Studies (ICMS), Nasarawa State University, Keffi, explained that one of the principal reasons for public scepticism towards government borrowing was the perceived disconnect between the amounts borrowed and the infrastructure outcomes delivered. Nigerians, he further argued, were increasingly concerned that governments accumulate enormous debt obligations without providing sufficient information about the projects financed, the amounts disbursed, the physical progress achieved and the economic returns generated. This perception, he stressed, had weakened public confidence in borrowing as an instrument of development, adding that Sukuk can help change this narrative, provided that its project-linked features are supported by effective institutional and contractual safeguards.
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