The Federal Government of Nigeria has spent N1.1trn raised through six Sovereign Sukuk bonds to finance 124 federal road projects spanning over 5,820 kilometres across the six geopolitical zones of the country.
The Director General of the Securities and Exchange Commission, Emomotimi Agama, disclosed this during the 2nd International Islamic Capital Market Conference in Karachi, Pakistan, on Thursday.
According to a statement from SEC, Agama described Sukuk as a resilient and innovative tool for resource mobilisation, noting its significant role in Nigeria’s infrastructure development.
The statement read, “As the world seeks ethical and inclusive financial solutions, the Securities and Exchange Commission has said that the Federal Government of Nigeria has issued six Sovereign Sukuk worth N1.1tn ($657.6M) to finance 124 federal road projects covering over 5,820 kilometres across the six geopolitical zones of the country.”
Agama stated that since 2017, the issuance of Sovereign Sukuk has been instrumental in the growth of the Islamic Capital Market (ICM) in Nigeria, with each issuance being oversubscribed, recording subscription rates as high as 441 per cent.
He highlighted the increasing issuance of sub-national and corporate Sukuk, citing examples from Osun and Lagos States, Family Homes Ltd, TAJ Bank Plc, and private Sukuk issuances by other entities.
These instruments, he said, have been pivotal in funding school infrastructure, housing projects, and tier-one capital for a bank, showcasing the versatility of Sukuk as a financing tool.
Agama noted that Nigeria’s ICM segment now includes 14 registered Halal mutual funds with a net asset value exceeding N105bn as of November 2024.
Also, the NGX Lotus Islamic Index tracks 11 Shariah-compliant equities, while the country’s first Islamic Real Estate Investment Trust, ChapelHill N-REIT, underscores the potential of real estate investments within the market.
He attributed the growth of the Islamic finance industry in Nigeria to both global and domestic factors.
He cited Nigeria’s large Muslim population, government-backed Sukuk programmes, increasing investor awareness, and emerging innovations in financial technology as drivers of market expansion.
Notably, in 2022, the SEC registered the first Robo-advisory firm in the Nigerian capital market, focusing on Shariah-compliant investments.
Agama also highlighted the SEC’s longstanding commitment to the ICM, which began in 2004 when it joined the Islamic Finance Task Force of the International Organisation of Securities Commissions.
This commitment was further strengthened by the issuance of Islamic fund and Sukuk rules in 2010 and 2013, respectively, and the launch of the Non-Interest Capital Market Master Plan in 2015.
The Non-Interest Capital Market Master Plan (2015–2025), which is part of the broader Nigerian Capital Market Master Plan, aims for the ICM to contribute 25 percent of the country’s total market capitalisation by 2025, with Sukuk accounting for 15 per cent.
The plan also targets 50 listings of Shariah-compliant products with a market capitalisation of at least N5tn by 2025.
Agama noted that the implementation of the plan had been remarkable, with nine out of 15 outlined initiatives fully achieved as of 2022, representing a 70 per cent success rate.
Achievements include improved public awareness, increased retail participation in Sukuk, and the introduction of the Non-Interest Pension Fund (Fund VI) in collaboration with the National Pension Commission.
Additionally, guidelines for the taxation of non-interest transactions, developed in partnership with the Federal Inland Revenue Service, have resolved the issue of double taxation that previously hindered such transactions.
Despite these successes, Agama acknowledged challenges such as limited public awareness of Islamic finance principles, a lack of tradable instruments, and the need for better regulatory alignment across institutions.
He emphasised the importance of capacity-building in Shariah governance and compliance to sustain growth in the sector.
Agama also mentioned ongoing efforts to collaborate with stakeholders in the mortgage sector to develop Shariah-compliant housing finance solutions.
These initiatives, he said, would support the development of asset-backed instruments to further deepen Nigeria’s capital market.
Agama encouraged both domestic and foreign investors to explore the opportunities within Nigeria’s Islamic Capital Market, noting that the market addresses critical issues such as infrastructure deficits, financial exclusion, and ethical investment needs.
