SEC Highlights Success at Global Conference
The Nigerian Securities and Exchange Commission (SEC) has announced that the Federal Government has issued six Sovereign Sukuk bonds totaling ₦1.1 trillion ($657.6 million), aimed at financing 124 federal road projects spanning over 5,820 kilometers across the nation’s six geopolitical zones. This revelation came from Dr. Emomotimi Agama, SEC’s Director General, during his address at the 2nd International Islamic Capital Market Conference in Karachi, Pakistan.
Sukuk: A Pillar for Islamic Capital Market Growth
Dr. Agama described these Sukuk issuances as a fundamental driver for the growth of Nigeria’s Islamic Capital Market (ICM). Since their debut in 2017, these bonds have not only been consistently oversubscribed but have seen subscription rates soar to 441%, underscoring their role in resource mobilization.
Diversification in Sukuk Applications
The growth isn’t limited to sovereign issuances; sub-national and corporate entities have also embraced this financing model. States like Osun and Lagos, alongside companies such as Family Homes Ltd and TAJ Bank Plc, have leveraged Sukuk for various projects, from school infrastructure to housing, showcasing the instrument’s versatility.
Expanding Opportunities in the ICM
Beyond Sukuk, the ICM in Nigeria has evolved to offer diverse investment avenues. From a single fund in 2008, the market now features 14 Halal mutual funds with assets over ₦105 billion by November 2024. The NGX Lotus Islamic Index tracks 11 Sharia-compliant equities, while the ChapelHill N-REIT represents a pioneering move into Islamic real estate investments.
Drivers of Islamic Finance Expansion
The growth of Islamic finance in Nigeria is supported by both local and global factors. A significant Muslim population, government initiatives, and increasing investor awareness domestically, combined with global demographic shifts and economic diversification, fuel this expansion. Innovations like the SEC’s introduction of the first Sharia-compliant Robo advisory firm in 2022 further illustrate the sector’s forward momentum.
Strategic Focus and Historical Commitment
The SEC’s involvement with the ICM dates back to 2004, with significant strides made through the adoption of Islamic fund and Sukuk rules in 2010 and 2013. The Non-Interest Capital Market Master Plan (2015–2025) has been instrumental in setting a vision where the ICM contributes 25% to market capitalization by 2025, with Sukuk playing a major role.
Challenges and Future Directions
Despite the successes, challenges such as public awareness, the availability of tradable instruments, and regulatory alignment persist. Dr. Agama emphasized ongoing efforts to address these through capacity building, especially in Sharia governance, and fostering collaborations for Sharia-compliant housing finance solutions to further deepen the market.
This comprehensive approach showcases Nigeria’s commitment to leveraging Islamic finance principles for national development, highlighting both achievements and areas for future focus.
