SEC, DMO inaugurate committee for first sovereign Sukuk
The Securities and Exchange Commission (SEC) and the Debt Management Office (DMO) have inaugurated a committee for the nation's first sovereign 'Sukuk'.
Sukuk is an Islamic financial certificate, similar to a bond in Western finance that complies with the Islamic religious law, Sharia.
Mr Mounir Gwarzo, SEC Director-General, who confirmed the committee's inauguration to the News Agency of Nigeria (NAN) in Lagos, said it would work out modalities for the Sukuk.
Gwarzo said that the committee comprising staff of the commission and DMO would set up modalities for the first sovereign bond.
He said that Sukuk had not been approved by the commission at the moment.
Gwarzo said that recently, the commission was working with the DMO to ensure issuance of the bond in the second quarter of 2016.
He said that the commission would support DMO in capacity building to ensure successful issuance of the bond.
Gwarzo said that the slide in crude oil price and drop in revenue generation made it imperative for government to source for alternative source of capital to finance infrastructure development.
'The need for alternative sources of capital to finance infrastructure becomes increasingly more compelling with fragility of growth from major emerging markets,'' Gwarzo said.
He said the country would attract significant amounts of affordable capital from the Gulf countries and other established world issuing sovereign sukuk.
According to him, SEC and DMO will collaborate on ways to address the country's investment needs.
The director-general said that SEC would equally enable nominated staff of DMO to participate in the Capital Market Committee's sub-committee on non-interest products to deepen their capacity.
He added that the sovereign sukuk when issued would send the much needed positive message to the market amid the negative investor sentiment that persists currently.
Gwarzo predicted that Nigeria's maiden sovereign sukuk would be oversubscribed with enhanced participation of domestic and foreign investors.
NAN reports that when SEC released rules on sukuk issuance in 2013, the Osun State Government took advantage of the robust regulatory framework to issue the nation's first sukuk and raised N11.4 billion. (NAN)