Nigeria’s inaugural Sukuk bond, valued at N100 billion and issued on September 26, 2017, is scheduled to reach maturity on its seventh anniversary by September 26, 2024, as outlined in the 2023 Annual Activity Report from the Financial Markets Department of the Central Bank of Nigeria.
Since its issuance, Nigeria has been servicing the Sukuk bond through rental payments at a rate of 16.47% every March 26 and September 26, reflecting the debt service structure inherent in such financial instruments.
Sukuk, derived from an Arabic term, signifies investment certificates or notes that demonstrate a proportional interest in tangible assets, usufructs, services, or specific investment projects adhering to Shariah principles. These bonds integrate features of both equity (ownership shares in underlying assets/projects) and debt (fixed periodic payments/coupon payments).
The debut Sukuk offer, oversubscribed following its auction in 2017, attracted a diverse array of investors including pension funds, banks, fund managers, institutional investors, and retail participants. Although subscriptions totaled N105.878 billion, the Debt Management Office allotted the full N100 billion offered. Notably, over 1,000 retail investors nationwide contributed more than 4% of the total subscription.
Proceeds from the Sukuk issuance were earmarked for the construction and rehabilitation of 25 roads across Nigeria’s six geopolitical zones, including major projects such as the Abuja-Abaji-Lokoja Road, Obajana-Okene Road, Suleja-Minna Road, and Kaduna Eastern Bypass Road.
Since its introduction, the Sovereign Sukuk has become a significant instrument in Nigeria’s capital market, with subsequent issuances expanding its impact. As of now, six Sovereign Sukuk bonds have been issued, collectively raising approximately N1.092 trillion through the DMO’s efforts.
These funds have been instrumental in enhancing infrastructure development, facilitating the construction and refurbishment of over 4,000 kilometers of roads and bridges across the country.
The Sukuk program underscores Nigeria’s commitment to leveraging innovative financial instruments to support national development goals, ensuring sustainable growth and infrastructure enhancement nationwide.
