Director-General, Debt Management Office (DMO), Mrs Patience Oniha, says Sukuk issuance may be scaled to include other projects in future.
Oniha stated this at the third edition of Islamic Finance News Nigeria Road show, organised by Nigerian Exchange (NGX) Ltd., on Wednesday in Lagos.
The News Agency of Nigeria (NAN) reports that the theme of the show was “Systemic Restart: Islamic Finance in Nigeria.”
NAN also reports that the event, held virtually in collaboration with REDMoney Group, was aimed at promoting the growth and development of “Islamic Finance Industry’’ within the Nigerian economy.
It was also targeted at facilitating the growth of a new asset class in the industry.
Oniha, who maintained that the diversification might not be immediate, said that all the three Sukuk issuances had been raised for road infrastructure.
According to her, the Sukuk issuance initiative by DMO is to raise local borrowing through, adding that this has been successful since its first issuance in 2017.
“Certainly, we are working on Sukuk issuance for 2021. We have already received notification of interest; we are in the process of appointing transaction parties.
“I expect that by the third quarter of this year (2021), it will be out; it will almost be the same structure, although tenure may be different.
“It depends on where the market is at that time, what the cost is and also, what works with our medium term debt management strategy.
“On the long term, because the market understands it, we also understand it; it may also be for roads; that is the approval we have received. You know we have been using Sukuk for road projects.
“Going forward however, it may not be in the immediate term and not even next year; we need to upscale the Sukuk issuance to include other projects,’’ she said.
The DMO director-general added that the issuance could be used to support other projects that would be revenue- generating to service the Sukuk, even if it had to be issued in another currency.
She further explained that the existing capital market master plan recognised non-interest banking, which was initiated by CBN, followed by the capital market, which also recognised non-interest financial products.
On deepening retail investments to position the capital market for economic growth, Oniha noted that the NGX had always been supportive of new products as well as the FMDQ.
She said, “To develop the market, we really need to have a more diversified base of investors for all the products, especially as the government looks into huge investments on infrastructure for which funds may not all come from it.
“The market already has a good structure in terms of trading.
“We started from the wholesale market and later started coming to the retail market when we realised that those were the ones you needed to create awareness on and make easy for them to subscribe.’’
According to her, all the three Sukuk issuances have been over-subscribed by 10 per cent.