Sukuk Success: Nigeria’s Ethical Finance Model Draws Record Support for Infrastructure Drive

 

In a rare and resounding endorsement of Nigeria’s economic instruments, the Federal Government’s latest Sukuk issuance has attracted over ₦2.2 trillion in subscriptions—despite being a ₦300 billion offer. That’s an astonishing oversubscription rate of 735%, a strong signal that investor confidence in Nigeria’s infrastructure-focused borrowing strategy is on the rise.

The Sukuk, issued by the Debt Management Office (DMO), is Nigeria’s seventh in the series of Shariah-compliant, non-interest bonds since its introduction in 2017. Unlike conventional bonds, Sukuk offer ethical investment options in line with Islamic finance principles, but their appeal has steadily grown beyond religious lines—evident in the sheer breadth of participation this time around.

From retail investors to pension funds, non-interest banks to asset managers, the appetite for this alternative financing model suggests a shift in the domestic financial landscape. More importantly, it reflects renewed confidence in the government’s framework for deploying borrowed funds transparently and effectively.

The proceeds, as confirmed by the DMO, will be channelled into essential infrastructure—primarily roads and bridges—across all six geopolitical zones and the Federal Capital Territory. This is not merely a funding mechanism; it’s a tangible extension of the current administration’s "Renewed Hope Agenda" which sees infrastructure as a cornerstone of national development, job creation, and economic cohesion.

Since 2017, funds raised through Sukuk have completed over 44 major road projects stretching more than 4,000 kilometres. They’ve improved rural-urban connectivity, cut travel times, and lowered vehicle operating costs. This new tranche will build on that success, with project selection coordinated by the Ministry of Works and Housing in partnership with the Ministry of Finance.

But this is not just about tarmac and bridges. It’s also a story of inclusive financial growth. The DMO has positioned Sukuk as a gateway for retail and institutional investors alike—particularly those seeking ethical alternatives to traditional debt instruments. By doing so, Nigeria has taken meaningful strides in capital market diversification and broadened participation in national development financing.

It’s also worth noting that the Sukuk model supports fiscal prudence. It adheres to the deficit limits outlined in the Fiscal Responsibility Act while still providing the capital necessary to invest in long-term growth. This balance is essential in a country where debt sustainability is increasingly under scrutiny.

Analysts, including Dr Wahab Balogun of Ambosit Capital Managers, believe Sukuk is now firmly embedded in Nigeria’s borrowing toolkit. With this level of investor enthusiasm, future issuances may well exceed expectations—provided the government maintains its commitment to transparency and results-driven spending.

As funds are earmarked for immediate deployment, what comes next will be critical. The projects must speak for the promise behind the paper. And if past performance is any guide, Nigerians have reason to be cautiously optimistic that this financial instrument will continue delivering real-world impact where it’s needed most.