The Federal Government of Nigeria has issued six Sovereign Sukuk bonds worth N1.1tn (approximately $657.6m) to finance 124 federal road projects covering over 5,820 kilometres across the country’s six geopolitical zones.
The Director-General of the Securities and Exchange Commission, Emomotimi Agama, disclosed this at the ongoing second International Islamic Capital Market Conference in Karachi, Pakistan.
A sukuk bond, also known as an Islamic bond or Sharia-compliant bond, is a financial certificate that gives investors partial ownership of an issuer’s assets.
Agama emphasised the growing success of Sukuk in Nigeria, stating, “The success rate makes the Islamic Capital Market stand out as a resilient and innovative tool for mobilising resources.”
He also noted the consistent oversubscription of Sukuk issuances, with subscription rates as high as 441 per cent. Agama highlighted that since 2017, the issuance of sovereign Sukuk has been a critical pillar in the development of ICM in Nigeria.
He pointed out that the growth of Sukuk has extended beyond the federal level, with states like Osun and Lagos, Family Homes Ltd., and TAJ Bank Plc also utilising Sukuk for projects ranging from school infrastructure to housing and bank capital.
Agama explained, “These instruments have been instrumental in funding school infrastructure and housing, and they are the first of their kind in Nigeria, tier 1 capital for a bank, underscoring the versatility of Sukuk as a financing tool.”
The SEC also highlighted the increasing scope of the Islamic finance sector in Nigeria. “Beyond Sukuk, the ICM segment in Nigeria offers diverse investment opportunities,” Agama remarked.
He noted that as of November 2024, there were 14 registered Halal mutual funds with a net asset value exceeding N105bn. Additionally, the NGX Lotus Islamic Index tracks 11 Shariah-compliant equities, and ChapelHill N-REIT emerged as Nigeria’s first Islamic Real Estate Investment Trust.
Agama stated that the commission was committed to the growth of the Islamic finance sector through its strategic Non-Interest Capital Market Master Plan (2015–2025), aimed at Sukuk contributing 15 per cent of the total market capitalisation by 2025.
Looking ahead, Agama stressed Islamic finance’s potential to address Nigeria’s economic challenges, particularly in critical areas such as infrastructure, financial exclusion, and low mortgage penetration.
“Islamic finance is solving some practical challenges and needs of the Nigerian economy,” he remarked.
“This is the time to stake positions that will no doubt produce competitive returns and satisfy ethical and sustainability concerns,” he added.
The PUNCH reported that the Federal Executive Council approved a $2.2bn external borrowing plan. The financing initiative will combine Eurobond and Sukuk offerings estimated at $1.7bn and $500m, respectively, to reinforce Nigeria’s fiscal stability, said Edun, who added that the results of the FG’s economic reforms qualified Nigeria for the international capital market financing.