FG raises N1.1tn via Sukuk to finance road projects

• Published On: 16 December 2024 at 11:23

The Federal Government of Nigeria has raised N1.1 trillion ($657.6 million) through six sovereign sukuk to fund 124 federal road projects across the country's six geopolitical zones.

These projects will cover a total of 5,820 kilometers and aim to improve infrastructure and promote economic growth.

Dr. Emomotimi Agama, Director General of the Security and Exchange Commission, made the disclosure on Sunday at the ongoing 2nd International Islamic Capital Market Conference in Karachi, Pakistan.

According to a Commission statement, Dr. Agama stated that the Islamic Capital Market's high success rate demonstrates its resilience and innovation as a resource mobilization tool.

According to the statement, Dr. Agama described the issuance of sovereign Sukuk since 2017 as a key driver of the ICM's growth in Nigeria.

He pointed out that these issuances have consistently been oversubscribed, with subscription rates as high as 441%.

He also emphasized the increase in sub-national and corporate Sukuk issuances in Nigeria, citing examples such as Osun and Lagos states, Family Homes Ltd, TAJ Bank Plc, and three other sub-national private Sukuk issuances.

He stated that these instruments have been critical in funding school infrastructure, housing projects, and, most notably, the first tier 1 capital for a Nigerian bank. This demonstrates the versatility of Sukuk as a financing tool.

"In addition to Sukuk, Nigeria's ICM segment provides a diverse range of investment opportunities. From one registered fund in 2008, the segment now has 14 registered Halal mutual funds with a net asset value of more than N105 billion as of November 2024. The NGX Lotus Islamic Index tracks 11 Shariah-compliant equities, while ChapelHill N-REIT, Nigeria's first Islamic Real Estate Investment Trust, emphasizes the potential for real estate investments.

Locally, Nigeria's large Muslim population, government-backed Sukuk initiatives, and rising investor awareness are propelling market growth. Emerging fintech innovations provide additional market development opportunities. In this regard, the SEC registered the first Robo advisory firm in Nigeria's capital market in 2022. This Robo Advisor focuses on Shari'ah-compliant investments."

Agama stated that the success of the ICM in Nigeria is deeply rooted in its strategic focus on infrastructure financing, financial inclusion, and sustainability.