The International Islamic Financial Market (IIFM) recently hosted a virtual webinar on the 11th edition of its Annual Sukuk report. It brought together various scholars and experts in the Islamic finance industry who extensively discussed global Sukuk issuances across countries.

The report highlighted that 2021 was another record year for Sukuk, with issuances amounting to $188 billion compared to $175 billion in 2020. Most of the Sukuk issued are international, while others are domestic issuances.

In his presentation, the guest speaker asserted that the Sukuk market remains highly concentrated, with the top four countries accounting for 88.5% of total issuances. At the same time, $77bn were mostly domestic Sukuk issuances.

Malaysia continued to rank number 1, having 41% market share, while Saudi Arabia accounted for 22%, followed by Indonesia and Turkiye with 12.4% and 9.5% market share, respectively.  Considering how Sukuk funds infrastructure, Nigeria, the most prominent African country, has leveraged the Sukuk to fund its road rehabilitation projects nationwide.

Nigeria has issued over three Sukuk through the Debt Management Office (DMO),  supporting the government and the economy. The Debt Management Office (DMO) recently listed the N250bn, 10-year 13% Ijarah Sovereign Sukuk due 2031, in the Nigerian Exchange Limited (NGX), on Tuesday, July 5, 2022.

The Ijarah Sovereign Sukuk was successfully listed on the NGX, having fulfilled the conditions set by the Financial Regulatory Advisory Council of Experts (FRACE) of the Central Bank of Nigeria. TRACE has noted that trading in the instrument would only be permissible after the commencement of work on the road projects scheduled for construction through the Sukuk assets.

The debt office commenced the issuance of Sukuk in September 2017, and since the establishment of the initiative, Nigeria has issued four Sovereign Sukuk in 2017, 2018, 2020 and 2021.

The Sukuk Choice

• Sukuk is an investment certificate representing the holder's ownership interest in an asset or pool of assets. The certificate entitles the holder to receive income from using the assets.
• Sukuk has become one of the most prominent Islamic finance funding mechanisms utilized in recent years and is a significant infrastructure development financing tool for emerging markets globally and embraces financial inclusion to diversify income.
• It focuses on long-term infrastructure projects, human capital development, and sustainable finance and is asset-backed.

In Nigeria, the Sukuk program supports the construction and rehabilitation of critical economic infrastructure, such as roads across the six geopolitical zones, and diversifies government funding sources.