With the launch of a N300 billion Sukuk bond on Monday, the federal government is aiming to deepen Nigeria’s capital market and accelerate infrastructure development, as appetite for Islamic finance instruments and renewed investor confidence in the country’s fiscal reforms grow.
The offering, the seventh in the series since 2017, will fund critical road and bridge projects across Nigeria’s six geopolitical zones, while broadening participation in non-interest debt markets.
With a history of successful sukuk issuances, the bond offering has attracted strong investor interest, underlining both domestic and international confidence in Nigeria’s economic trajectory.
At the investors meeting for the new sukuk bond, Patience Oniha, Director-General of the DMO, noted the significant evolution of public awareness and participation in sukuk since the first offering in 2017.
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“When we began this journey in 2017, we could not have predicted the level of interest and familiarity with sukuk that we are seeing today,” Oniha said. “This growing familiarity is a testament to the success of our objective to develop the domestic capital market, making it more inclusive and diversified.”
The N300 billion offering is the latest in a series of sukuk bonds that have collectively raised N1.093 trillion, with the proceeds being allocated to the construction and rehabilitation of roads and bridges across the six geopolitical zones.
This issuance continues to support the government’s infrastructure development agenda, which remains a critical pillar of Nigeria’s economic growth strategy.
The sukuk bond being offered has a rental rate of 19.75%, a seven-year tenor, and a bullet payment structure at maturity. Rental payments will be made bi-annually, ensuring regular income for investors.
The offering is open to all classes of investors, with a minimum subscription of NGN10,000 (at NGN1,000 per unit) and multiples of NGN1,000 thereafter.
One of the attractive features of this sukuk bond is that it qualifies as a government security under the Company Income Tax Act (CITA) and the Personal Income Tax Act (PITA), providing tax exemptions for investors.
Furthermore, the bond is classified as a liquid asset by the Central Bank of Nigeria (CBN) and qualifies as a security in which trustees can invest under the Trustees Investment Act, adding to its appeal for institutional investors.
The bond will be listed on both the Nigerian Exchange Limited and the FMDQ Securities Exchange, ensuring transparency and liquidity.
The Sukuk bonds are backed by the full faith and credit of the Federal Government of Nigeria, offering a low-risk investment opportunity for a diverse group of investors.
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The proceeds from this sukuk offering will be used to finance the construction and rehabilitation of key road projects and bridges identified by the implementing agencies of the Federal Government.
Oniha emphasised the importance of these infrastructure projects in driving economic growth, particularly as Nigeria continues to focus on improving its road networks to facilitate trade and mobility.
“The Sukuk proceeds will directly contribute to critical infrastructure projects that will benefit Nigerians across the country,” she stated. This is in line with the Federal Government’s broader strategy to address the nation’s infrastructure deficit and improve the ease of doing business through better connectivity.
The DMO’s efforts to promote the sukuk bond as a sustainable source of funding for infrastructure projects have paid off, with each issuance helping to develop a robust and transparent market for Islamic finance in Nigeria, she stated.
Oniha stressed the importance of maintaining investor confidence, noting that the DMO’s transparency in debt management and proactive communication with investors has been central to Nigeria’s success in raising capital.
“Whether it is through Sukuk, Eurobonds, or Treasury bills, Nigeria is committed to offering a variety of investment products that meet the diverse needs of local and international investors,” she said.
Oniha also discussed Nigeria’s improving fiscal position, with recent upgrades in the country’s credit ratings bolstering investor confidence.
“The recent upgrade by Fitch Ratings from ‘B-‘ to ‘B’ is an important milestone,” Oniha said. “It reflects our continued commitment to fiscal responsibility, as well as the positive impact of the government’s economic reforms.”
Addressing concerns over debt sustainability, Oniha assured investors that the government is mindful of the need to balance debt service with long-term economic growth. Nigeria’s public debt, which stood at N144.67 trillion as of December 2024, includes a mix of external and domestic debt, with a sizeable portion in long-term instruments such as bonds.
She explained that the DMO’s approach has been to ensure that debt maturity profiles are well-spread over time, providing fiscal flexibility.
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Oniha also noted that Nigeria is working to improve its revenue base through tax reforms and initiatives aimed at boosting oil sector revenues.
She pointed out that as the country seeks to grow its nominal GDP, these efforts, combined with policies aimed at stabilizing the exchange rate and fostering a favorable business environment, would contribute to a more sustainable fiscal path.
During his presentation, Ayo-Oluwa Aderibigbe of Stanbic IBTC Capital praised Sukuk-funded roads, with Marina in Lagos serving as a prime example of its positive impact across Nigeria’s six geopolitical zones.
Attahiru Maccido, MD of Buraq Capital, explained that the proceeds would finance road and bridge projects identified by the Federal Ministry of Works and FCTA.
