By Aduragbemi Omiyale
The Debt Management Office (DMO) has said it may expand the scope of Sukuk by using proceeds from the Islamic bonds to funds projects that have the capacity to generate revenue.
The Director-General of the DMO, Ms Patience Oniha, made this known last Wednesday when she participated in the 3rd edition of the Islamic Finance News (IFN) Nigeria Roadshow 2021.
She said the idea behind this is to ensure that Sukuk projects are able to generate funds to use to repay the debts, adding that the agency was also planning to use funds from the Sukuk issuances to execute other projects apart from roads.
At the moment, proceeds from the past Islamic bonds have been used to finance road projects across the six geo-political zones of the federation.
“The Sukuk initiative by DMO Nigeria has been increasingly successful given the strong level of awareness that has been created.
“This success can also be attributed to the increased confidence from market participants given that the Sukuk bonds are tied to specific projects that can be tracked.
“Looking ahead, we recognize the need to upscale issuances to include other standalone projects beyond road infrastructure, but more importantly, we are looking to support projects that are revenue-generating to service the Sukuk.
“Furthermore, there must be a focus on growing and diversifying the investor base for the Sukuk as well as other investment products,” she said.
The event, themed Systemic Restart: Islamic Finance in Nigeria, was organised by the Nigerian Exchange (NGX) Limited in collaboration with REDMoney Group.
The forum served to promote the growth and development of the Islamic finance industry within the Nigerian economy and facilitate the growth of a new asset class in the industry.
In his presentation, the Chief Executive Officer of NGX Limited, Mr Temi Popoola, noted that, “According to the Islamic Finance Development Report 2020, the Islamic finance industry’s assets grew by 14 per cent in 2019 to $2.88 trillion, returning to its long-term pattern of strong growth after the slowdown in 2018.
“In Nigeria, the Islamic finance sector continues to grow with increased interests from market participants and a growing number of players including two Islamic banks, four takaful insurance companies and several microfinance banks and managed funds.
“Following the issuance of the first Sukuk in Sub-Saharan African – the Osun State N11.4 billion 7-year Ijarah Sukuk in 2013, the increasing demand for ethical investments in Nigeria has further led to 3 successful Sukuk issuances totalling N362.6 billion by the DMO on behalf of the federal government of Nigeria from 2018 till date; all of which were largely oversubscribed and have been listed on NGX.”
Mr Popoola further expressed NGX’s commitment to building this asset class, saying, “NGX will continue to provide an efficient and liquid market for investors and businesses in Africa, to save and access Shariah-compliant capital and investments.”
“Our collaboration with RedMoney in convening the annual IFN Nigeria forum attests to our belief in the potential and importance of Islamic finance in catalysing inclusive economic recovery and a more sustainable global economic growth.
“We will collaborate with all market stakeholders to contribute towards the growth of Islamic finance in Nigeria and Africa at large,” he said.
Adedapo Adesanya 
Modupe Gbadeyanka