The Securities and Exchange Commission (SEC) says the federal government has issued six sovereign sukuk bonds worth N1.1 trillion ($657.6 million) to finance 124 road projects spanning over 5,820 kilometers across the country’s six geopolitical zones.
Emomotimi Agama, the director-general of the SEC, spoke during the 2nd international Islamic Capital Market (ICM) conference in Pakistan.
Agama said the initiative underscores the potential of the ICM as a resilient and innovative resource mobilisation tool.
He said the issuance of the sukuk bonds since 2017 has been a central driver of growth in Nigeria’s ICM, noting that the offerings have regularly attracted strong investor interest, with subscription rates climbing as high as 441 percent.
The SEC DG said sub-national and corporate sukuk issuances are on the rise in Nigeria, citing examples such as Osun and Lagos states, Family Homes Ltd, and TAJ Bank Plc, along with private sukuk issuances from three other sub-nationals.
He said the instruments have played a crucial role in financing projects like school infrastructure, housing, and tier-1 capital for a bank — the first in Nigeria.
“Beyond Sukuk, the ICM segment in Nigeria offers diverse investment opportunities. From one registered fund in 2008, the segment currently boasts of 14 registered Halal mutual funds with a net asset value exceeding ₦105 billion as of November 2024,” Agama said.
“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 Shariah-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.”
‘NON-INTEREST CAPITAL MARKET (NICM) RECORDED 70% SUCCESS RATE’
Agama said the success of the ICM is built on a strategic focus on infrastructure financing, financial inclusion, and sustainability.
He said the SEC’s involvement in the ICM dates back to 2004, when it became a member of the Islamic finance task force of the International Organisation of Securities Commissions (IOSCO).
Agama said the commitment led to the introduction of the Islamic Fund and Sukuk Rules in 2010 and 2013, respectively.
This, he said, was later reinforced by the non-interest capital market master plan (2015–2025), which provides a 10-year strategy for enhancing the market’s depth and diversity.
“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%,” he said.
“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 market capitalization 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 taxation of Non-Interest transactions, in collaboration with the FIRS. This solved the challenge of double taxation hindering such transactions.”
‘SEC IMPLEMENTING STRATEGIES TO ADDRESS CRITICAL AREAS IN ICM SECTOR’
Agama said despite the significant growth of the ICM sector over the past 15 years, challenges such as low public awareness of Islamic finance principles, a limited supply of tradable instruments, and the need for better regulatory coordination among institutions, persist.
“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 sector, providing targeted and effective solutions,” the SEC boss added.
He stressed that Islamic finance offers limitless opportunities, addressing key economic challenges in Nigeria such as infrastructure deficits, financial exclusion, low mortgage penetration, and limited interest in commercial financing due to religious or ethical considerations.
According to the SEC chief, the rising activity in Nigeria’s market and the establishment of benchmarks for corporates and sub-nationals present significant opportunities for ethical investors and foreign capital looking for sustainable investment options.
Agama said the evolving market presents lucrative opportunities for both local and foreign investors.
He encouraged foreign investors to align with domestic market trends by taking positions and increasing their stakes, stressing that it presents a valuable opportunity to support sustainable economic growth and promote financial inclusion in Nigeria and across the African continent.
