From Adanna Nnamani, Abuja
To close Nigeria’s infrastructure deficit, the federal government is seeking to expand the scope of projects financed through Sukuk.
This was disclosed by the Director-General of the Debt Management Office (DMO), Patience Oniha, during the Investors Meeting for the Federal Government of Nigeria (FGN) N300 Billion Series VII Sovereign Sukuk Issuance held on Monday in Abuja.
Oniha noted that Nigeria has made steady progress with Sukuk financing, which has grown to N300 billion in the current tranche.
The funds, she said, will be deployed to critical road and bridge projects across the country to support the government’s economic growth and development agenda.
The DMO boss explained that Sukuk is part of the approved domestic borrowing captured in the federal government’s annual budget, hence there is no need for additional legislative approval. However, she emphasised the need for more budgetary allocations to projects that qualify for Sukuk financing, as this remains a key limitation.
“As we can see, the demand market has grown. What we need now is to have more projects included in the budget that can be funded through Sukuk. That’s a legislative matter,” she stated.
She also hinted at the government’s long-term plan to finance revenue-generating projects through Sukuk, provided such projects can repay both the principal and rental obligations attached to the instrument. Addressing concerns around the frequency of Sukuk issuance, the DMO chief acknowledged that the process is resource-intensive and requires approvals from multiple bodies, including the Central Bank of Nigeria (CBN) and Islamic finance experts from abroad. This, she said, makes it impractical to issue Sukuk in small, frequent tranches.
“It takes a lot of work to issue Sukuk. Where we should be going is a situation where we have a pot of N1 trillion and can spread it over several quarters. But issuing N50 billion or N100 billion is not cost-efficient,” she said.
Oniha also called for stronger participation from non-interest financial institutions, saying their presence in the Sukuk market remains limited compared to commercial banks and pension fund administrators.
“We do understand your needs, and we have tried to accommodate them. But we really need to see more strength from you so we can all get more,” she urged.
The DG further assured stakeholders that Sukuk proceeds are being transparently utilized, with visible projects in various regions of the country. “We just need to drive around and see those projects. Some of the pictures shown today were actual Sukuk-supported infrastructure,” she said.
On investor participation, she disclosed that while the current issuance is still open, previous Sukuk tranches attracted a broad spectrum of investors, including commercial banks, non-interest financial institutions, insurance firms, foundations, and individuals.
The DMO also provided an update on Nigeria’s public debt stock, which stands at N144 trillion as of December 2024. This figure includes the combined debt of the federal government, the 36 state governments, and the Federal Capital Territory, encompassing both external and domestic components.
The Investors Meeting was organised as part of stakeholder engagement for the Series VII Sovereign Sukuk issuance. In the offer summary, the DMO disclosed that the N300 billion is being raised through a 7-Year Ijarah (Lease) Sukuk due May 2032, with a rental rate of 19.75 percent per annum, payable half-yearly.
The offer opened on May 12, 2025, and will close on May 20, 2025, with settlement on May 23, 2025. Each unit of the Sukuk is priced at N1,000, with a minimum subscription of N10,000 and in multiples of N1,000 thereafter.
The Sukuk qualifies as a government security under relevant tax laws and is listed on the Nigerian Exchange and FMDQ Securities Exchange. It is also classified as liquid assets by the CBN.
Since 2017, Nigeria has raised over N1 trillion through Sukuk, funding hundreds of kilometers of road construction and rehabilitation across the six geopolitical zones. The Series VII issuance continues the trend of leveraging Islamic finance to address the country’s pressing infrastructure needs.
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