The Securities and Exchange Commission 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 six geopolitical zones of the country.
Dr. Emomotimi Agama, the Director General of the SEC, made this statement during the ongoing 2nd International Islamic Capital Market Conference in Karachi, Pakistan, on Thursday. He highlighted that the high success rate of these issuances demonstrates that the Islamic Capital Market (ICM) is a resilient and innovative tool for mobilizing resources
Agama noted that since the first issuance of sovereign Sukuk in 2017, it has become a key pillar supporting the growth of the ICM in Nigeria. He also mentioned that these Sukuk issuances have consistently been oversubscribed, with subscription rates reaching as high as 441%.
He disclosed that Sub-national and corporate Sukuk issuances are also growing in Nigeria.
Notable examples include Osun and Lagos states, Family Homes Ltd, and TAJ Bank Plc. along with private Sukuk issuances by three other sub-nationals, saying that these instruments have been instrumental in funding school infrastructure, housing and a first of its kind in Nigeria, tier 1 capital for a bank and underscores the versatility of Sukuk as a financing tool.
“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.
Agama said the success of the ICM in Nigeria is deeply rooted in its strategic focus on infrastructure financing, financial inclusion, and sustainability as the SEC’s engagement with the ICM dates back to 2004, when the SEC joined the Islamic Finance Task Force of the International Organization of Securities Commissions (IOSCO).
The SEC boss said this commitment was followed by the issuance of Islamic fund and Sukuk Rules in 2010 and 2013, respectively and later solidified in the Non-Interest Capital Market Master Plan (2015–2025), which outlines a 10-year roadmap for expanding the market’s depth and diversity.
According to him, “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 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 the 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.”
