Federal Government Issues N1tn Sukuk Bond to Fund 124 Road Projects
The Federal Government of Nigeria has issued six Sovereign Sukuk bonds worth N1.1 trillion (approximately $657.6 million) to fund 124 federal road projects spanning over 5,820 kilometers across the country’s six geopolitical zones.
The announcement was made by Emomotimi Agama, Director-General of the Securities and Exchange Commission (SEC), during the second International Islamic Capital Market Conference in Karachi, Pakistan.
Sukuk bonds, also known as Islamic or Sharia-compliant bonds, offer investors partial ownership of the issuer’s assets. Agama emphasized the increasing popularity and success of Sukuk in Nigeria, stating that the consistent oversubscription rates—reaching up to 441%—reflect their resilience and effectiveness as a resource mobilization tool.
Since their introduction in 2017, Sovereign Sukuk has played a pivotal role in advancing Nigeria’s infrastructure development. Beyond federal projects, Sukuk financing has also been utilized by states such as Osun and Lagos, and institutions like Family Homes Ltd. and TAJ Bank Plc, for initiatives ranging from school infrastructure to housing and bank capital.
“These instruments have been instrumental in funding school infrastructure, housing, and tier-1 capital for banks, showcasing the versatility of Sukuk as a financing tool,” Agama noted.
The Islamic finance sector in Nigeria has been expanding, with 14 registered Halal mutual funds valued at over N105 billion as of November 2024, and the NGX Lotus Islamic Index tracking 11 Shariah-compliant equities. ChapelHill N-REIT recently debuted as Nigeria’s first Islamic Real Estate Investment Trust.
Agama highlighted the SEC’s commitment to promoting the Islamic finance sector through its Non-Interest Capital Market Master Plan (2015–2025). The plan aims for Sukuk to contribute 15% of the total market capitalization by 2025.
“Islamic finance is addressing critical needs in Nigeria, such as infrastructure, financial exclusion, and low mortgage penetration,” Agama said. “This is the time to stake positions that will deliver competitive returns while meeting ethical and sustainability goals.”
In a related development, the Federal Executive Council recently approved a $2.2 billion external borrowing plan, combining Eurobond and Sukuk offerings valued at $1.7 billion and $500 million, respectively. Minister of Finance and Coordinating Minister of the Economy, Wale Edun, noted that the initiative would enhance Nigeria’s fiscal stability and underscored the FG’s economic reforms, which have positioned the country to access international capital markets.
