Islamic finance received a boost in Nigeria, with the Securities and Exchange Commission and Debt Management Office reaching agreement to issue country’s maiden sovereign ‘sukuk’.
Sukuk is an Islamic finance certificate, similar to a bond in Western finance, that complies with the tenets of Islamic law, the Shariah.
Under a Sukuk, the issuer sells an investor group the certificate, which then rents it back to the issuer for a predetermined rental fee, while the issuer also makes a contractual promise to buy back the bonds at a future date at par value.
The decision by the two government agencies to collaborate to issue the Sukuk was a major outcome of the visit of the Director General of SEC, Mounir Gwarzo to the Director-General of DMO on Wednesday.
During the visit, Mr. Gwarzo said the agreement by the two chief executives to partner to deepen the domestic bond market was a clear sign of a closer working relationship they were now enjoy.
Welcoming the SEC delegation to his office, Mr. Nwankwo highlighted the importance DMO attached to the non-interest products in the Nigerian financial market.
He revealed that issuing a sovereign Sukuk has been part of the institution’s strategic plan drawn three years ago, urging Nigerians to support SEC to building capacity in order to realize the goal of issuing Nigeria’s first sovereign Sukuk in 2016.
Responding, Mr. Gwarzo assured the DMO of continued support of SEC, pledging to adopt measures that would enhance the capacity of relevant staff of the debt management agency.
The measures include establishing regular interface between the DMO and key staff of SEC who are very knowledgeable in non-interest finance products.
Mr. Gwarzo said the commission would equally allow DMO staff to participate in the Capital Market Committee sub-committee on non-interest products to further deepen their knowledge and expertise.