THE Securities and Exchange Commission (SEC) announced that the Federal Government of Nigeria has issued six Sovereign Sukuk totaling ₦1.1 trillion ($657.6 million) to finance 124 federal road projects spanning over 5,820 kilometers across the country’s six geopolitical zones.
Dr. Emomotimi Agama, the SEC’s Director General, made this statement on Thursday at the ongoing 2nd International Islamic Capital Market Conference in Karachi, Pakistan. He highlighted the high success rate of these Sukuk issuances, which positions the Islamic Capital Market (ICM) as a resilient and innovative resource mobilization tool.
Agama noted that since 2017, the issuance of sovereign Sukuk has been a crucial factor in the growth of the ICM in Nigeria, with subscription rates often exceeding expectations, reaching as high as 441%. He also pointed out the increasing trend of Sub-national and corporate Sukuk issuances, citing examples from Osun and Lagos states, Family Homes Ltd, and TAJ Bank Plc, as well as private Sukuk from three other sub-national entities. These instruments have played a vital role in financing school infrastructure, housing projects, and even tier 1 capital for banks, showcasing Sukuk’s versatility as a financing tool.
Beyond Sukuk, Agama emphasized that the ICM in Nigeria offers a variety of investment opportunities. From a single registered fund in 2008, the segment has grown to 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, and Nigeria’s first Islamic Real Estate Investment Trust, ChapelHill N-REIT, exemplifies the potential of real estate investments.
The growth prospects for Nigeria’s Islamic finance sector are supported by both global and domestic factors.
Globally, demographic shifts, economic diversification in oil-dependent economies, and regulatory support have increased demand for Sharia-compliant products. Locally, Nigeria’s large Muslim population, government-backed Sukuk initiatives, and rising investor awareness are driving market expansion.
Additionally, innovations in fintech present further opportunities, highlighted by the SEC’s registration of Nigeria’s first Robo advisory firm in 2022, focused on Sharia-compliant investments.
Agama attributed the success of the ICM in Nigeria to its strategic emphasis on infrastructure financing, financial inclusion, and sustainability, noting that the SEC’s involvement with the ICM dates back to 2004, when it joined the Islamic Finance Task Force of the International Organization of Securities Commissions (IOSCO).
This commitment led to the establishment of Islamic fund and Sukuk rules in 2010 and 2013, respectively, and was further solidified by the Non-Interest Capital Market Master Plan (2015–2025), which outlines a ten-year strategy for enhancing the market’s depth and diversity.
He stated, “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 envisions that the Islamic Capital Market—also known as the Non-Interest Capital Market (NICM)—will 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 market capitalisation 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 taxation of Non-Interest transactions, in collaboration with the FIRS. This solved the challenge of double taxation hindering such transactions”.
The SEC DG, however, said the growth of the ICM segment within a decade and a half, has come with some challenges including limited public awareness of Islamic finance principles, paucity of tradable instruments, and regulatory alignment across institutions.
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.”