National Economy
Wednesday, June 4, 2025
  • Home
  • News
    • International Business
  • Lead-In
    • Cover
    • Investigation
  • Economy
    • Nigerian Economy
    • Fiscal Policy
    • Energy
    • Agri Business
    • Transportation
    • Industry
    • Competition
    • Homes & Property
    • Insurance
    • Companies & Markets
      • Companies
      • Capital Market
  • Tech
  • States & Politics
  • Commentary
    • Analyst
    • Business Matters
    • All Angles Considered
    • ClickSend
  • Editorial
  • Data
  • Others
    • Opinion
    • Money Guide
    • Analysis
    • Growth
    • Sport Economy
No Result
View All Result
Read News
National Economy
  • Home
  • News
    • International Business
  • Lead-In
    • Cover
    • Investigation
  • Economy
    • Nigerian Economy
    • Fiscal Policy
    • Energy
    • Agri Business
    • Transportation
    • Industry
    • Competition
    • Homes & Property
    • Insurance
    • Companies & Markets
      • Companies
      • Capital Market
  • Tech
  • States & Politics
  • Commentary
    • Analyst
    • Business Matters
    • All Angles Considered
    • ClickSend
  • Editorial
  • Data
  • Others
    • Opinion
    • Money Guide
    • Analysis
    • Growth
    • Sport Economy
No Result
View All Result
National Economy
No Result
View All Result
Home Features

Diversifying Investment Portfolio, Infrastructure Development Via Sovereign Sukuk

by Ngozi Ibe and NAN
2 days ago
in Features
Reading Time: 4 mins read
Diversifying Investment Portfolio,Infrastructure Development Via Sovereign Sukuk
Share on FacebookShare on TwitterShare on Telegram

With the rapid growth of Nigeria’s population and the attendant need for development, it has become imperative for government to build infrastructure at minimal cost.

Stakeholders posit that bad infrastructure is one of the country’s biggest roadblocks to smooth corporate operations and capital inflows.

They say the present mode of financing infrastructure is usually marred due to high cost of servicing the debt secured to finance the infrastructure deficit in Nigeria.

Experts say Sukuk financing is one of the effective alternatives and strategies for enhancing growth and development through capital project financing.

You May Like

Naira-for-Crude And Matters Arising

Smartphones And Declining Moral Values Among Young People

Recently, the Debt Management Office (DMO) hosted an investor meeting for the N300 billion series seven Sovereign Sukuk issuance in Abuja.

The DMO had earlier hosted an all parties meeting on March 26 in Lagos, in preparation for the Sukuk issuance.

The director-general of the DMO, Patience Oniha, said that the Federal Government had been able to raise a total of N1.09 trillion through the Sovereign Sukuk since 2017, to support infrastructure development.
Since 2017, the DMO has completed six Sukuk issuances, raising N1.092 trillion to fund road and bridge projects.
Oniha recalled that the first Sukuk was issued in September, 2017.

She said that after extensive marketing, the offer, which was for N100 billion with a tenor of seven years, received a total subscription of N105.878 billion.
Oniha said that following the modest success of the first Sukuk and the achievement recorded from Sept. 2017 to Dec. 2023 when the last Sukuk was issued, the DMO had raised a total of N1.09 trillion.
“With this amount, over 4,100 km of roads and nine bridges across the six geopolitical zones in Nigeria and the Federal Capital Territory have either been constructed or rehabilitated.’’
Oniha said that the projects had brought substantial benefits, including reduced travel time improved road safety and job creation.
See also Tackling cross-border crimes in FCT and neigbouring states

She said that the projects also created improved access to markets for remote farmers, increased access to public services like education and healthcare, and economic development as a whole.
“In addition to those benefits, other reasons for the sustained issuance are the fact that the Sukuk is project-tied, promotes financial inclusion and contributes to the development of the domestic financial market.
“Sukuk has been well accepted as demonstrated by the level of subscription received in the past.
“Investors get fulfillment of contributing to infrastructure development, and also getting a return in terms of income which is paid every six months,” Oniha said.
Experts say that if alternatives sources with minimum cost are pursued, Sukuk can be a viable option for funding large-scale infrastructure investments in Nigeria.
They urged the Federal Government to take immediate steps to increase non-Muslim awareness of Sukuk by engaging in more interactions with the public, to improve capital market intermediation and stimulate the issuance of more Sukuk as a reliable source of funding.

According to them, Sovereign Sukuk has contributed to financial inclusion and economic growth by providing Shariah-compliant investment opportunities, catering to certain underserved populations.
“It also attracts diverse investors, including Islamic finance institutions, broadening the investor base and deepening financial markets.
“Sukuk injects liquidity into the economy, promoting economic activity and growth.

“These contributions can have a positive impact on overall economic growth and development,’’ an economist said.
For investors, Sukuk provides a sense of project ownership and ensures that economic activities are based on tangible assets, giving investors a secure foundation for their investments.
For the government, Sukuk can be an effective financing instrument for infrastructure development and economic growth, as seen in countries like Indonesia.

However, experts advise government to establish a comprehensive approach to assist working units in technical ministries in project preparation, development, and service delivery.
See also DMO appoints Stanbic IBTC as new FG stockbrokers

They call for support and guidance for instrumental stakeholders like technical ministries to have the authority and tools to achieve Sukuk project success.
Sukuk can contribute to achieving sustainable development by benefiting individuals, institutions, societies, and the country as a whole.
Investors in Nigeria see Sukuk as an attractive option for diversifying their portfolios and supporting infrastructure development.

However, industry analysts believe that Sukuk, as a source of financing infrastructural deficit in Nigeria, needs to attract young retail investors.
They believe that Nigeria can benefit immensely from deep capital for financing infrastructure through Sukuk.

Uche Uwaleke, a Professor of Capital Market at the Nasarawa State University, Keffi, said that Sukuk was the route to go by the Federal Government in obtaining project-tied credit facilities.

According to Uwaleke, the issuance of N300 billion Sukuk by the DMO on behalf of the Fededal Government is highly commendable.

“Recall that when the Federal Government first entered the Sukuk market in 2017, only N100 billion worth of Sukuk was issued.

“So, the current one represents an improvement as investors are given more room to diversify their portfolio.

“I am particularly happy that the government is upscaling the use of Sukuk in plugging the infrastructure gap in Nigeria.

“The advantage that Sukuk has over the conventional bond is that it is asset-backed.’’

Uwaleke said that Sukuk proceeds must be tied to infrastructure which was why proceeds had been applied to road construction.

“Given that it is an infrastructure based bond, Sukuk represents a critical instrument for Nigeria’s economic development.”

The expert, however, said that the Sukuk market size in Nigeria was still very small despite the potentials.

He urged governments, both at the federal and sub-national levels to utilise more of Sukuk when raising funds from the domestic capital market considering the huge infrastructural gap in the country.
See also GBV: Men also cry

“It is by so doing that government borrowing can be more impactful and also work to reduce the country’s debt burden,” he said.
He urged members of the public to take advantage the opportunity and invest in Sukuk because, unlike conventional bonds, as it was tax- free with a predictable and stable return.
Attahiru Machido, a stockbroker, said that the idea of Sovereign Sukuk was informed by the need to bridge infrastructure deficit in the country.
Machido said that the roads constructed with the proceeds of Sukuk would be effectively supervised to ensure that they meet the required standard.

“The roads must remain usable throughout the lifespan of the Sukuk ” he said.
Olalade Agboola, bank executive, said that Sukuk, like all other government securities, was backed by the full faith and credit of the federal government and charged upon the general assets of Nigeria.

“It also qualifies as securities in which trustees can invest under the Trustees Investment Act.

“It qualifies as government securities within the meaning of the Company Income Tax Act and Personal Income Tax Act for tax exemption and pension funds, amongst other investors,” she said.
As the Federal Government continues to explore funding options to bridge the wide infrastructure gap, experts hold that a cost effective, project-tied credit option like the Sovereign Sukuk is a veritable choice.(NANFeatures)

Tags: Diversifying Investment PortfolioInfrastructure Development Via Sovereign Sukuk
ShareTweetShare
Previous Post

Delta Govt Vows To Keep Investing In Tertiary Institutions

Next Post

As Experts Offer Solutions To Sustain Falling Food Prices

ANOTHER GOOD READ

Naira-for-Crude And Matters Arising
Features

Naira-for-Crude And Matters Arising

1 month ago
Smartphones And Declining Moral Values Among Young People
Features

Smartphones And Declining Moral Values Among Young People

2 months ago
High TB Mortality In Nigeria: A Call To Action
Features

High TB Mortality In Nigeria: A Call To Action

2 months ago
Wale Tinubu’s Quest To Expand Oando’s Footprint Beyond Africa
Features

Wale Tinubu’s Quest To Expand Oando’s Footprint Beyond Africa

3 months ago
IWD: Evaluating Women’s Role In Aviation Sector
Features

IWD: Evaluating Women’s Role In Aviation Sector

3 months ago
Implications Of NPA’s 15% Tariff Hike
Features

Implications Of NPA’s 15% Tariff Hike

3 months ago
Next Post
As Experts Offer Solutions To Sustain Falling Food Prices

As Experts Offer Solutions To Sustain Falling Food Prices

Most Recent

PENGASSAN Secures 300% Wage Increase For Oil And Gas Workers

PENGASSAN Secures 300% Wage Increase For Oil And Gas Workers

June 3, 2025
1,500 Bureau De Change To Shut As Recapitalisation Deadline Elapses

1,500 Bureau De Change To Shut As Recapitalisation Deadline Elapses

June 3, 2025
FIRS Engages Oil, Gas Stakeholders On E-invoicing Ahead Of July Launch

FIRS Entering New Era Of Excellence, Trust — Adedeji

June 3, 2025
JUST-IN: Reps Pass Tax Reform Bills

N250bn Public Expenditures Unaccounted — Reps

June 3, 2025
5 Unicorns In 9 Years, Who Does That?

5 Unicorns In 9 Years, Who Does That?

June 2, 2025
Guinness Record: Ali Seeks Gov Eno’s Support For World Title Fight

Guinness Record: Ali Seeks Gov Eno’s Support For World Title Fight

June 2, 2025
2026 World Cup Could Change Football Experience – Neymar

2026 World Cup Could Change Football Experience – Neymar

June 2, 2025
2025 National Sports Federations’ Board Elections: NSC Unveils Timeline Proposed Timelines For 2025 National Sports Federations’ Elections

2025 National Sports Federations’ Board Elections: NSC Unveils Timeline Proposed Timelines For 2025 National Sports Federations’ Elections

June 2, 2025
Advertise with us

© 2024 | National Economy

No Result
View All Result
  • Home
  • News
    • International Business
  • Lead-In
    • Cover
    • Investigation
  • Economy
    • Nigerian Economy
    • Fiscal Policy
    • Energy
    • Agri Business
    • Transportation
    • Industry
    • Competition
    • Homes & Property
    • Insurance
    • Companies & Markets
      • Companies
      • Capital Market
  • Tech
  • States & Politics
  • Commentary
    • Analyst
    • Business Matters
    • All Angles Considered
    • ClickSend
  • Editorial
  • Data
  • Others
    • Opinion
    • Money Guide
    • Analysis
    • Growth
    • Sport Economy

© 2024 | National Economy