Market News

By Abdullateef Aliyu, Lagos 

The federal government has, through the Sovereign Sukuk Bond which debuted in 2017, successfully raised N1.09 trillion, the Debt Management Office (DMO) has disclosed.

The Sukuk Funds have been deployed towards funding critical infrastructure projects such as road, bridges across the country.

Speaking on Wednesday in Lagos during “an all-parties meeting” for the issuance of the seventh series of the Sovereign Sukuk, Director-General of the DMO, Patience Oniha, disclosed that the latest series of approximately N300 billion would be channeled to finance capital projects.

She said, “We recall that the first Sukuk was issued in September 2017. After extensive marketing, the offer, which was for N100 billion with a tenor of seven years, received a total subscription of N105.878 billion.

“Following the modest success of the first Sukuk and the achievement recorded from September 2017 to December 2023, the DMO has raised a total of N1.09 trillion.  

With this amount, over 4,100 km of roads and nine bridges across Nigeria’s six geopolitical zones and the Federal Capital Territory have either been constructed or rehabilitated.”

Daily Trust reports that the basic principle behind Sukuk, popularly known as an Islamic or Shariah-compliant “Bond”, is that the holder has an undivided ownership right in a particular asset and is therefore entitled to the return generated by that asset.

As a component of Islamic finance, Sukuk is a non-interest based investment and financing instrument but its application is not restricted to Muslims as it conforms to ethical standards and justice.

Following the introduction of Sukuk, there were hues and cries in Nigeria over an alleged attempt to Islamise the country but since its introduction, the federal government had deployed the Sharia-compliant bond to fund critical road projects across the country.

The issuance of the Sovereign Sukuk is supported by financial advisers such as Lotus Financial Services Limited, Buraq Capital Limited, Stanbic IBTC Capital Limited, Greenwich Merchant Bank Limited.

The DMO boss stressed the transformative impact of the infrastructure projects funded by the Sukuk.

She added that the projects have increased access to essential public services such as education, healthcare and financial inclusion.

“In addition to those benefits, other reasons for the sustained issuance are the fact that the Sukuk is project-tied, promotes financial inclusion, and contributes to the development of the domestic financial market,” Oniha explained. 

She said the acceptance of the Sukuk has been commendable given the high subscription rates in past issuances.