EDITORIAL: Development Financing In The Post COVID Economy

All kinds of options will have to be thoroughly assessed in the new economy after the pandemic. In an excellent opinion piece on this page, astute public affairs analyst Iwalomhe Donald has seminally clarified the use of the hitherto innovative Sukuk Funds in infrastructure financing.

Sukuk made the headlines again with the Federal Government of Nigeria launching a seven-year N100 billion ijara (lease) Sukuk due 2025 at an annual rental rate of 15.743%. With oil prices plummeting and much of the world heading into recession, the revenue of the Federal Government has been significantly affected, launching the Sukuk bonds was a savvy counter – cyclical measure.

Unlike when it was first introduced into Nigeria by the then governor of the State of Osun, Ogbeni Rauf Aregbesola, there are no dissenting voices this time round, all the misconceptions and fears, much of it contrived, have been laid to rest. We give deserved kudos to Rauf Aregbesola, his foresight shows the need to rise above the timidity that has for long held back innovation and that has stifled progress.

Within the context of today’s condition, long-term development financing instruments must be put on the front burner. A major overhang that we have had is the short-term nature of the Anglo – Saxon finance system inherited from our colonial experience. Even those who evolved it have vehemently complained that it has put them at a competitive disadvantage, in relation to their competitors even in Europe such as the Germans. We must take note of this and continuously develop a host of longer tenure financial instruments.

We give kudos to the Federal Government and acknowledge the pioneering can-do attitude of those who brought this framework unto the centre stage.