Nigeria to explore Sukuks through 2017

Sukuk, the Islamic equivalent of bonds, will be a part of Nigeria’s strategic framework through 2017, market development director Patience Oniha of the Debt Management Office has told Bloomberg.

Unlike conventional bonds, which bestow ownership of a debt, a sukuk will grant the investor a share of an asset, along with the equal cash flows and risk.

Senegal is notably way ahead of Africa’s largest economy, opening a sale of Sukuks this week for about $208 million thus tapping into a global market that may surpass record issuance of $46.5 billion in 2012. Worldwide offerings rose 27 percent to $24.4 billion in 2014 from a year earlier. Senegal is thus in a strong position to site itself as Africa’s hub for Islamic finance.

In September 2013, Cocoa producing Osun state sold about $64 million or N10 billion naira of Sukuk; becoming the first state in Nigeria to explore this alternative form of financing.