Sukuk Still A Viable Instrument for Investments Amidst COVID-19 Pandemic - Dr Mohammed Dabiri

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Friday, May 08, 2020 / 1.00PM / Bukola Akinyele for WebTVng/  Header Image Credit: WebTV

 

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Despite the global financial market and economic uncertainty fuelled by the novel coronavirus, the Sukuk bond instrument remains a viable investment that could create superior value for different classes of investors.

 

Dr. Mohammed Dabiri, an Islamic Business and Finance lecturer at the Crescent University, Abeokuta, Ogun State, said this at an interview on WebTV's Islamic Finance Weekly program.

 

The Finance expert said the COVID-19 pandemic will not necessarily deter investments in the Sukuk market valued at over  $100bn, but could delay new issuances in 2020.

 

He noted that with the signs of global recession setting in with reports of negative growth in the United States of America, Spain and the Eurozone, the Non-Interest finance market will also feel the impact of the pandemic.


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Dr. Dabiri also stated that Nigeria, for example, was supposed to issue a third FGN Sukuk bond which has been delayed as a result of the disruptions caused by the coronavirus pandemic.

 

Despite concerns around global stability, the scholar noted that the oversubscription of the two previous issuances showed the increased acceptability of the Sukuk as a means of financing infrastructural projects by the Federal Government and states like The State of Osun.

 

Speaking further he said Islamic Finance is backed by asset and the returns is guaranteed compared to other form of investment. According to him "Also, in future there might be Islamic finance investment in the real estate as well where people who can't invest in the whole property can have a fund share of properties and have access to it".

 

Dabiri added that the retail Sukuk was another avenue for deepening the alternative finance market, leveraging on the opportunities in the social investment market.

 

In terms of fiscal policy steps he stressed that it was time for the Nigerian government to aggressively drive the agenda of full diversification of its revenue from crude oil. Dabiri also called on the government to explore avenues to support private businesses.


With respect to monetary policy, he urged the Central Bank of Nigeria (CBN) to work out modalities for reducing interest rates, to support critical sectors especially the micro, small and medium enterprises (MSMEs).

 

Looking at the impact on the socio-economic and political stability of the country, Dabiri said the pandemic would affect all groups of people such as the rich, poor, old and  young,  but it would also provide an opportunity for family bonding courtesy of global lockdowns.

 

He alluded to the fact that the COVID-19 crisis would provide an opportunity for effective leadership and communication with citizens, with Lagos state as one of the examples and models to understand and emulate.

 

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