FG issues N1.1trn Sovereign Sukuk for infrastructure in seven years — SEC
The Securities and Exchange Commission (SEC) has revealed that since 2017, the Nigerian federal government has issued six Sovereign Sukuk bonds, amounting to N1.1 trillion ($657.6 million). The proceeds from these bond issuances have been allocated to finance 124 federal road projects, covering a total of over 5,820 kilometres across Nigeria’s six geopolitical zones.
This disclosure was made by the SEC Director General, Dr. Emomotimi Agama, during the 2nd International Islamic Capital Market (ICM) Conference held in Karachi on Thursday.
A statement from the SEC highlighted that Dr. Agama expressed satisfaction with the subscription rates for Nigeria’s Sovereign Sukuk, which have reached as high as 441 percent. This, he noted, demonstrates the resilience and innovation of the ICM as an effective tool for resource mobilisation.
Dr. Agama attributed the growth of Nigeria’s Islamic Capital Market to the successful issuance of sovereign Sukuk, as well as the increasing involvement of sub-national and corporate entities. He pointed out that states such as Osun and Lagos, as well as corporate entities like Family Homes Ltd and TAJ Bank Plc, have used Sukuk to fund various projects, including school infrastructure, housing, and bank capital. This, he stated, highlights the versatility of these instruments.
“These instruments have been instrumental in funding critical infrastructure and innovative projects, such as tier-1 capital for a bank, a first in Nigeria,” Dr. Agama remarked.
In addition to Sukuk, Nigeria’s ICM has seen significant diversification. From having just one registered fund in 2008, the segment now boasts 14 Halal mutual funds, with a combined net asset value exceeding N105 billion as of November 2024. The NGX Lotus Islamic Index, which tracks 11 Shariah-compliant equities, and Nigeria’s first Islamic Real Estate Investment Trust (ChapelHill N-REIT), further demonstrate the growing opportunities in the sector.
Dr. Agama identified several factors driving the growth of Nigeria’s Islamic finance industry. Globally, efforts at economic diversification, regulatory support, and shifting demographic trends are increasing demand for Sharia-compliant products. Locally, Nigeria’s large Muslim population, government-backed Sukuk initiatives, and rising investor awareness have strengthened the market’s expansion.
He also pointed out that innovations in fintech are transforming the landscape. In 2022, the SEC registered Nigeria’s first Robo-advisory firm, focused on Shariah-compliant investments, thereby expanding access and participation in the market.
Dr. Agama stressed that the success of the ICM is rooted in its alignment with Nigeria’s broader goals of infrastructure financing, financial inclusion, and sustainability. He traced this focus back to 2004, when the SEC joined the Islamic Finance Task Force of the International Organization of Securities Commissions (IOSCO). This was followed by the issuance of Islamic funds and Sukuk regulations in 2010 and 2013, which laid the foundation for the Non-Interest Capital Market Master Plan (NICMMP) 2015–2025.
The NICMMP envisions that by 2025, the ICM will account for 25 percent of Nigeria’s total market capitalisation, with Sukuk contributing 15 percent. A 2021 review of the master plan set a target of 50 Shariah-compliant product listings, with a combined market capitalisation of at least N5 trillion ($11 billion) by 2025.
“The performance of the NICMMP has been remarkable, with 70% of its initiatives fully implemented by 2022. These include improved public awareness, increased retail participation in Sukuk, and the introduction of the Non-Interest Pension Fund (Fund VI) in collaboration with PenCom,” Dr. Agama said.
However, despite these successes, Nigeria’s Islamic finance sector faces ongoing challenges. These include limited public awareness, a shortage of tradable instruments, and the need for greater regulatory alignment. To address these issues, the SEC is focusing on capacity-building in Shariah governance, compliance, and collaboration with stakeholders to develop innovative Shariah-compliant instruments.
Dr. Agama also revealed that efforts are underway to engage stakeholders in the mortgage sector to develop Shariah-compliant housing finance solutions. These could serve as a catalyst for the creation of asset-backed instruments, further deepening the market.
As Islamic finance continues to play a crucial role in addressing Nigeria’s infrastructure deficit, financial exclusion, and ethical investment needs, Dr. Agama encouraged both domestic and international investors to seize opportunities in the sector.
“This is the time to take positions that will yield competitive returns while meeting ethical and sustainability concerns. The stage is set for investment, and foreign participants should align with domestic trends,” he concluded.
