Economy
DMO to Explore Revenue-Generating Sukuk Projects
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.
By Adedapo Adesanya
Nigeria ranked as Africa’s leading destination for upstream oil and gas investment in 2024, new research from market intelligence firm, Wood Mackenzie, has shown, accounting for three out of four Final Investment Decisions (FIDs) announced by global oil and gas majors, totaling $13.5 billion.
The FIDs announced within the Nigerian market included Shell’s $122 million investment in the Iseni Gas Project, TotalEnergies’ $566 million commitment to the Ubeta Gas Project and Shell’s approval of the Bonga North Tranche 1 project valued at around $5 billion.
According to the Special Adviser to President Bola Tinubu on Energy, Ms Olu Verheijen, these investments reflected Nigeria’s ongoing efforts to unlock its hydrocarbon potential through investor-friendly policies and strategic global partnerships.
Last year, Nigeria introduced several initiatives to create a conducive environment for oil and gas investors, including new tax incentives aimed at attracting up to $10 billion in natural gas investments.
Nigeria, which is Africa’s largest oil producer, also offered tax relief for gas investors, reducing corporate income tax and extending capital allowance benefits – for deepwater gas projects.
Other policies include the Presidential Directive on Local Content Compliance Requirements 2024 to address the reduction in oil and gas investments caused by high operating costs compared to global markets.
Also, the Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines 2024 reduces the time spent to award contracts for oil and gas projects.
In addition to the directives, Nigeria also launched its 2024 oil and gas licensing round, offering 19 blocks for exploration, demonstrating its commitment to continued collaboration with local, regional and international partners.
Market analysts note that with this momentum, further FIDs are anticipated, including TotalEnergies’ expected $750 million commitment to the Ima Shallow Gas Project in 2025.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.22 per cent decline on Monday, January 20, with the market capitalisation shedding N2.35 billion to close at N1.073 trillion compared with the preceding session’s N1.075 trillion and the NASD Unlisted Security Index (NSI) going down by 6.79 points to wrap the session at 3,105.12 points compared with 3,111.91 points recorded in the previous session.
It was observed that the loss recorded on the first trading day of the week was triggered by UBN Property Plc, which crashed by 20 Kobo to trade at N2.00 per share versus last Friday’s N2.20 per share.
However, the share price of Industrial and General Insurance (IGI) Plc went up by 4 Kobo to 40 Kobo per unit from 36 Kobo per unit, it could not stop the bourse from going down at the close of transactions.
The activity chart showed that on Monday, the volume of securities traded by investors increased by 57.9 per cent to 767,610 units from the 486,215 units traded in the preceding session, while the value of shares traded yesterday slumped by 17.7 per cent to N2.3 million from the N2.8 million recorded in the preceding trading day, as the number of deals declined by 14.3 per cent to 12 deals from the 14 deals carried out in the previous trading day.
At the close of transactions, FrieslandCampina Wamco Nigeria Plc remained the most active stock by value on a year-to-date basis with the sale of 4.1 million units worth N162.9 million, followed by Geo-Fluids Plc with a turnover of 9.1 million units valued at N44.0 million, and 11 Plc with the sale of 55,358 for N14.5 million.
Also, Industrial and General Insurance (IGI) Plc closed the day as the most active stock by volume on a year-to-date basis with 25.3 million units sold for N5.9 million, Geo-Fluids Plc came next with 9.1 million units valued at N44.0 million, and FrieslandCampina Wamco Nigeria Plc with 4.1 million units worth N162.9 million.
By Adedapo Adesanya
The value of the Naira weakened against the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, January 20 amid FX pressures associated with this period.
Most people who came into the country for Christmas and New Year holidays are already going back and are in need of forex, putting pressure on the local currency.
Also, the poor performance of the domestic currency could be attributed to end to the 42-day access granted by the Central Bank of Nigeria (CBN) to Bureaux de Change (BDC) operators to buy forex at official price.
According to data from the FMDQ Securities Exchange, the Nigerian Naira lost 0.16 per cent or N2.47 on the greeback yesterday to sell at N1,550.05/$1, in contrast to last Friday’s rate of N1,547.58/$1.
Similarly, the Naira slumped against the Pound Sterling in the spot market on Monday by N23.39 to trade at N1,906.98/£1 versus N1,883.59/£1 and depreciated against the Euro by N23.14 to sell for N1,613.48/€1 compared with last Friday’s N1,590.34/€1.
However, in the parallel market, the Nigerian currency improved its value against the Dollar during the session by N5 to quote at N1,665/$1 compared with the previous session’s N1,670/$1.
As for the cryptocurrency market, it turned red yesterday as the US President, Mr Donald Trump, didn’t bring up the much-expected subject of crypto in his inauguration speech on Monday afternoon.
Mr Trump had promised a far more friendly crypto policy stance than the previous administration but in the long speech that announced his plans in the coming days, he didn’t make mention of Bitcoin or crypto.
Just over the weekend, the President ignited a speculative frenzy with the Friday evening launch of the Trump meme coin, which was shortly followed by a meme coin associated with his wife, Melania.
Dogecoin (DOGE) crumbled yesterday by 6.3 per cent to $0.3419, Solana (SOL) slumped by 4.7 per cent to $235.32, Cardano (ADA) fell by 3.6 per cent to $0.9777, and Litecoin (LTC) moderated by 1.9 per cent to $114.98.
Further, Ethereum (ETH) went down by 1.7 per cent to $3,241.36, Binance Coin (BNB) retreated by 1.4 per cent to $693.30, Ripple (XRP) depreciated by 1.2 per cent to $3.06, and Bitcoin (BTC) tumbled by 0.8 per cent to $101,746.99, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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