The Debt Management Office (DMO) of Nigeria announced the remarkable success of the Series VII Sovereign Sukuk issuance, achieving an oversubscription of 735% with total subscriptions exceeding N2.21 trillion against an initial offer of N300 billion. This impressive outcome underscores the growing investor confidence in the Sukuk instrument as a viable and ethical investment avenue. The Series VII Sukuk, structured as a Forward Ijarah (Lease) Sukuk, carries a rental rate of 19.75% per annum and matures in May 2032. The offer period spanned from May 12, 2025, to May 20, 2025, with the settlement date on May 23, 2025. The substantial oversubscription signals strong investor appetite for this Shariah-compliant financial instrument, which adheres to ethical principles and promotes financial inclusion.
Sukuk, often referred to as Islamic bonds, represent a unique investment structure rooted in Shariah principles. Unlike conventional bonds that pay interest, Sukuk holders possess partial ownership in the underlying asset and receive returns generated by that asset. This distinction aligns with Islamic finance principles that prohibit interest-based transactions. Notably, Sukuk investments are not limited to Muslim investors, as their ethical framework and focus on asset-backed returns appeal to a broader investor base seeking socially responsible and transparent investment options. The Securities and Exchange Commission (SEC) emphasizes Sukuk’s compliance with ethical standards and justice, further reinforcing its appeal to ethically conscious investors.
The DMO views the overwhelming success of the Series VII Sukuk as validation of its strategic decision to introduce this innovative instrument in 2017. This initiative aimed to broaden Nigeria’s investor base and provide greater access to capital market opportunities for all citizens, regardless of their religious beliefs. The diverse range of subscribers, including retail investors, non-interest banks, conventional banks, pension fund administrators, asset/fund managers, and others, highlights the Sukuk’s widespread acceptance and appeal across various investor segments. This diversified participation underscores the instrument’s potential to mobilize capital from a wider pool of investors, contributing to national economic development.
The proceeds from the Series VII Sukuk issuance will be dedicated to financing critical infrastructure projects across Nigeria. Specifically, the funds will support the construction of new roads, rehabilitation of existing road networks, and the building of bridges in all six geopolitical zones of the country, including the Federal Capital Territory. This targeted allocation of funds aligns with the Federal Government’s “Renewed Hope Agenda,” which prioritizes infrastructure development as a cornerstone of its economic strategy. Improved infrastructure is crucial for facilitating economic growth, enhancing connectivity, and fostering regional development.
The DMO’s commitment to providing safe and liquid investment products aligns with its broader mandate to manage public debt effectively and promote financial market development. The success of the Sukuk issuances demonstrates the DMO’s ability to innovate and adapt to the evolving needs of investors while supporting the government’s development objectives. By offering a Shariah-compliant investment option, the DMO has effectively tapped into a previously underserved segment of the market, further strengthening the Nigerian capital market and promoting financial inclusion.
The remarkable success of the Series VII Sovereign Sukuk reinforces the growing recognition of Sukuk as a valuable investment instrument that promotes ethical investing and contributes to national development. The oversubscription reflects both investor confidence in the instrument and the DMO’s credibility as a debt manager. The strategic allocation of funds to infrastructure projects reinforces the government’s commitment to economic development and underscores the potential of Sukuk to play a pivotal role in financing critical infrastructure initiatives. The DMO’s continued efforts to expand investment options and promote financial inclusion are expected to further strengthen the Nigerian capital market and contribute to sustainable economic growth.
