Following the successful use of Islamic finance to fund infrastructure globally, Director General of the Infrastructure Concession Regulatory Commission, Mansur Ahmed, is seeking a regulatory framework to help bridge Nigeria’s N32 trillion infrastructure deficits.
Approval by the Central Bank of Nigeria (CBN) for the operation of the first Islamic bank in Nigeria, has been trailed by vehement opposition to the banking policy, which President of the Christian Association of Nigeria (CAN), Ayo Oristajafor, believes, is an attempt to Islamize the country in contravention of the constitution.
Ahmed said at a meeting with other regulators in the country’s financial sector that “the critical imperatives for the successful issuance of Islamic bonds (otherwise known as Sukuk) in Nigeria will include the right regulatory and taxation framework, transparent transaction structure, credit rating, marketing, risk and mitigation measures, appropriate technical capacity and guarantees.”
According to him, bridging the country’s infrastructure requirement spanning numerous sectors including transportation, power, water supply, education, housing and health, is beyond what the public sector can afford, hence the need to explore other alternative financing avenues.
Ahmed said Sukuk is particularly well suited for the Public Private Partnership being promoted by the federal government to upscale the nation’s level of infrastructure.
“Sukuks are becoming important means of funding large scale investment projects around the world, while for investors; the Sukuk market provides greater potential for diversification into new asset classes. Sukuk has matured into a diversified, internationally accepted instrument to raise corporate finance for acquisitions or working capital purposes, or use in the transportation sector, real estate, infrastructure construction and petrochemical projects in several countries,” he explained.
Commenting, CBN Governor, Mallam Sanusi Lamido Sanusi, said if Sukuk is properly harnessed, it would contribute to the effort of the Ministry of Finance to source funds from international markets and diversify sources of funding for projects critical to national development.
He enjoined relevant government agencies to develop trusts and securities laws that would enhance smooth operations of Sukuk and provide a level playing field for participants in the capital market.
Also speaking, Director General of the Debt Management Office, Dr. Abraham Nwankwo canvassed extensive information, communication and education of the public and potential players in the capital market for the success of Islamic bonds.