The Federal Government of Nigeria has issued six Sovereign Sukuk, totaling ₦1.1 trillion ($657.6 million), to finance 124 federal road projects that span more than 5,820 kilometers across the country’s six geopolitical zones, according to the Securities and Exchange Commission (SEC).
The SEC’s Director General, Dr. Emomotimi Agama, made this declaration Thursday during the 2nd International Islamic Capital Market Conference accessed by BrandSpur digital news platform, which is currently taking place in Karachi, Pakistan. He emphasized that the Islamic Capital Market (ICM) is a robust and creative mechanism for resource mobilization, as seen by the high success rate of these issuances.
According to him, Sovereign Sukuk has grown to be a crucial pillar assisting in the expansion of the ICM in Nigeria since its initial issue in 2017. Additionally, he noted that subscription rates for these Sukuk issuances have regularly exceeded 441%, indicating that they have been oversubscribed. He revealed that Nigeria is also seeing an increase in corporate and subnational Sukuk issuances.
The states of Osun and Lagos, Family Homes Ltd., and TAJ Bank Plc. are notable examples, as are private Sukuk issuances by three other sub-nationals. They claim that these instruments have been crucial in financing housing, school infrastructure, and tier 1 capital for a bank, which is the first of its kind in Nigeria and highlights the flexibility of Sukuk as a financing tool.
According to SEC: “Beyond Sukuk, the ICM segment in Nigeria offers diverse investment opportunities. From one registered fund in 2008, the segment currently boasts 14 registered Halal mutual funds with a net asset value exceeding ₦105 billion as of November 2024. The NGX Lotus Islamic Index tracks 11 Shariah-compliant equities, while Nigeria’s first Islamic Real Estate Investment Trust – ChapelHill N-REIT – highlights the potential of real estate investments.
“The prospects for Nigeria’s Islamic finance industry are underpinned by key growth drivers, both global and domestic. Globally, demographic trends, economic diversification efforts in oil-dependent economies, and regulatory support have spurred demand for Sharia-compliant products.
“Locally, Nigeria’s large Muslim population, government-backed Sukuk initiatives, and growing investor awareness are driving market expansion. Emerging innovations in fintech also present further opportunities for market development. In that regard, the SEC registered the first Robo advisory firm in the Nigerian Capital Market in 2022. This Robo Advisor is focused on Shari’ah-compliant investments,” it added.
Continuing, Dr. Agama stated that the ICM’s strategic emphasis on infrastructure financing, financial inclusion, and sustainability is fundamental to its success in Nigeria. SEC has been involved with the ICM since 2004 when it joined the International Organization of Securities Commissions (IOSCO) Islamic Finance Task Force.
According to him, this promise was subsequently reinforced in the Non-Interest Capital Market Master Plan (2015–2025), which provides a 10-year roadmap for increasing the market’s depth and diversity. This commitment was followed by the issuing of Islamic funds and Sukuk Rules in 2010 and 2013, respectively.
Furthering, he said: “Adopted in 2015 as part of the broader Nigerian Capital Market Master Plan (2015–2025), the Non-Interest Capital Market Master Plan (NICMMP) has been central to the development of the ICM segment in Nigeria. The document sets out a vision for the Islamic Capital Market – otherwise known as the Non-Interest Capital Market (NICM) in Nigeria – to contribute 25% of total market capitalization by 2025, with Sukuk accounting for 15%.
“The masterplan was further reviewed in 2021 to provide a renewed focus on deepening the ICM through targeting 50 listings of sharia-compliant products with a market capitalization of at least N5 trillion ($11 billion) by 2025.
“The performance of the NICM Masterplan has been remarkable. Of the 15 initiatives outlined in the roadmap, nine had been fully implemented as of 2022, representing a 70% success rate. Key achievements include improved public awareness, increased retail participation in Sukuk, and the introduction of the Non-Interest Pension Fund (Fund VI) through collaboration with the National Pension Commission (PenCom). Another key achievement was the release of guidelines for the taxation of Non-Interest transactions, in collaboration with the FIRS. This solved the challenge of double taxation hindering such transactions,” he added.
However, according to Dr. Agama, the expansion of the ICM segment in just ten and a half years has been fraught with difficulties, such as a lack of marketable instruments, regulatory harmonization between institutions, and low public understanding of Islamic financial concepts.
Adding, he said: “Capacity-building efforts, particularly in Shariah governance and compliance, remain critical to sustaining growth. These, of course, are critical areas the SEC is currently implementing strategies to address, with relevant stakeholders particularly in the public and private sectors, providing targeted and effective solutions. Of particular interest is our ongoing effort to engage relevant stakeholders in the mortgage sector to develop Shariah-compliant housing finance solutions. This will create the needed impetus for developing Shariah-compliant Asset backed instruments to deepen our capital market further.”
