By Ayomide Otitoju
The Federal Government of Nigeria has issued six Sovereign Sukuk totaling ₦1.1 trillion (approximately $657.6 million) to finance 124 federal road projects spanning over 5,820 kilometers across the country’s six geopolitical zones. This announcement was made by the Director General of the Securities and Exchange Commission (SEC), Dr. Emomotimi Agama, during the ongoing 2nd International Islamic Capital Market Conference in Karachi, Pakistan.
Dr. Agama highlighted the significant success of the Islamic Capital Market (ICM) in Nigeria, calling it a resilient and innovative tool for resource mobilization. He noted that since the inception of Sukuk issuances in 2017, these financial instruments have become a key pillar of growth for the ICM in Nigeria, consistently being oversubscribed, with subscription rates reaching as high as 441%.
The SEC Chief also reported a growing trend in sub-national and corporate Sukuk issuances within Nigeria, with notable examples from Osun and Lagos states, Family Homes Ltd, and TAJ Bank Plc. These Sukuk have been instrumental in funding school infrastructure, housing projects, and even tier 1 capital for banks, showcasing the versatility of Sukuk as a financing mechanism.
Dr. Agama further detailed the diverse investment opportunities within the ICM segment in Nigeria, which has expanded from one registered fund in 2008 to 14 registered Halal mutual funds with a net asset value exceeding ₦105 billion as of November 2024. He also mentioned the NGX Lotus Islamic Index, which tracks 11 Shariah-compliant equities, and Nigeria’s first Islamic Real Estate Investment Trust, ChapelHill N-REIT.
The growth potential for Nigeria’s Islamic finance industry is supported by both global and local factors. Globally, there is an increasing demand for Sharia-compliant products driven by demographic changes, economic diversification in oil-dependent nations, and regulatory support. Domestically, Nigeria’s substantial Muslim population, government-backed Sukuk initiatives, and rising investor awareness are contributing to market expansion. Innovations in fintech are also creating new opportunities, exemplified by the SEC’s registration of the first robo-advisory firm in the Nigerian Capital Market in 2022, which focuses on Shari’ah-compliant investments.
Emphasizing the SEC’s strategic commitment to the ICM, Dr. Agama referenced the engagement that began in 2004 with the International Organization of Securities Commissions (IOSCO) Islamic Finance Task Force. He outlined key milestones, including the issuance of Islamic fund and Sukuk rules in 2010 and 2013, as well as the establishment of the Non-Interest Capital Market Master Plan (2015–2025). This masterplan aims for the ICM segment to account for 25% of total market capitalization by 2025, with Sukuk representing 15%.
Dr. Agama noted that of the 15 initiatives within the Non -Interest Capital Market Master Plan, nine had already been fully implemented as of 2022, reflecting a 70% success rate. These initiatives have led to enhanced public awareness, increased retail participation in Sukuk, and the introduction of a Non-Interest Pension Fund in collaboration with the National Pension Commission.
Despite these successes, Dr. Agama acknowledged challenges such as limited public awareness of Islamic finance principles, a shortage of tradable instruments, and the need for regulatory alignment. He emphasized the importance of capacity-building in Shariah governance and compliance as vital to sustaining growth. The SEC is collaborating with stakeholders in the public and private sectors to develop Shariah-compliant housing finance solutions, which could further deepen the capital market by integrating asset-backed instruments.
