Abuja: The Debt Management Office (DMO) hosted an investor meeting on Monday for the issuance of N300 billion series seven Sovereign Sukuk in Abuja. The Director-General of the DMO, Patience Oniha, emphasized that since its inception in 2017, Sukuk has become a preferred choice for non-interest investors in the capital market.
According to News Agency of Nigeria, Oniha highlighted that the acceptance of Sukuk underscores the DMO’s role in developing the domestic capital market while raising funds for the Federal Government. Since 2017, the government has raised a total of N1.09 trillion through the Sovereign Sukuk to support infrastructure development. The seventh series aims to raise N300 billion to finance additional capital projects.
Oniha recalled that the first Sukuk, issued in September 2017, initially aimed to raise N100 billion over a seven-year tenor and received a total subscription of N105.878 billion. The success of this initial offering and subsequent issuances has enabled the DMO to raise a total of N1.09 trillion by December 2023.
With these funds, more than 4,100 km of roads and nine bridges across Nigeria’s six geopolitical zones and the Federal Capital Territory (FCT) have been constructed or rehabilitated. Oniha noted that these projects have delivered significant benefits, including reduced travel time, improved road safety, and job creation. They have also enhanced access to markets for remote farmers, increased access to public services such as education and healthcare, and contributed to broader economic development.
Oniha further explained that the sustained issuance of Sukuk is driven by its project-tied nature, its role in promoting financial inclusion, and its contribution to the development of the domestic financial market. The high level of subscription in previous issuances reflects the broad acceptance of Sukuk by investors, who benefit from both contributing to infrastructure development and receiving income payments every six months.
Financial advisers play a crucial role in the issuance process, as highlighted by Oniha. They assist the Federal Government of Nigeria through the DMO by advising on the Sukuk’s structure, managing the offering process, and facilitating investor participation.
Attahiru Machido, a representative of Buraq Capital Limited, financial advisers to the transaction, stated that the idea of Sovereign Sukuk was driven by the need to bridge the country’s infrastructure deficit. Machido assured that roads constructed with Sukuk proceeds would be effectively supervised to ensure they meet required standards and remain usable throughout the Sukuk’s lifespan.
Olalade Agboola from Greenwich Merchant Bank, a mandated Issuing House of Sukuk, noted that the rental rate was set at 19.75 percent, with a seven-year tenor. The rental rate will be paid bi-annually, and the principal sum will be paid upon maturity. Agboola emphasized that the Sukuk represents a direct obligation of the Federal Government.
