Sukuk: DMO Plans to Expand the Investor Base in Nigeria with Future Issuances

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Friday, June 11, 2021 / 1:00PM / Bukola Akinyele-Yisau for WebTV /Header Image Credit: Vanguard News

 

One of the success stories of the Islamic Finance Market in Nigeria since 2014 has been the Sukuk bond issuance in the nation. At the moment, Nigeria has  raised over N362bn through the Issuance of 3 rounds of Ijarah Sukuk to finance road infrastructure across the 6 geo-political zones.

 

Recently in an  interview at the 2021 IFN OnAir Forum,  the Director General  of the Debt Management Office (DMO) Nigeria,  Patience  Oniha assessed the progress that has been made through the Sukuk issuances between 2017 to 2020.

 

According to her, the Sukuk issuance is an initiative of DMO to raise local borrowing which has been successful since inception in 2017.  She said there has been huge investments in the road infrastructure across the 6 geo-political zones in the country.

 

Oniha described the feedback from investors as remarkable with a 105% subscription(2017) , 132% subscription(2018)  and 470% subscription (2020) showing their confidence in the potentials of the Sukuk market.

 

According to her, the three  Sukuk Issuances has changed the nation's socio-economic landscape as the public is aware and have invested massively in the market.

 

The DMO boss added "In addition to raising money for the government, investors are happy with the fact that the Sukuk is project-tied and they can see the projects the funds are deployed for. There has been significant awareness created in the media on the value of this segment of the non-interest finance and how it can support economic development".

 

She said the 10 year (2015-2025) capital market master plan already recognized non interest financial product , and the Nigeria Exchange Limited and FMDQ Securities has been supportive of new products.

 

The product according to her is supported by guidelines in the fixed income market that also has non interest banking provisions.

 

She said, there is need to have a bigger and more diversified base of investors for all the products, especially the areas where government has huge investment in  infrastructure.

 

This she noted requires a lot of confidence as the capital market already has a good infrastructure in terms of trading, transparency, and information.

 

She also added that DMO will explore the Digitalization strategy to diversify its  investor pool. In 2020, DMO started looking at fintech enabled retail investors to participate in the market from their mobile phones. She cited Kenya as a country that uses fintech and work with 3 companies to provide the service.

 

Speaking on what to expect from the DMO in the next 12-18 months on Sukuk in Nigeria, the Director-General said the Debt Office may expand Sukuk to other projects for revenue generation. 


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