NIGERIA EYES NON-INTEREST FINANCE

Nigeria may end up issuing its first sovereign non-interest bearing bond aka islamic sukuk this year. That is, if the collaborative wishes of the Directors General of Securities and Exchange Commission (SEC) and Debt Management Office (DMO) come true.
At the office of the DMO DG, Dr Abraham Nwankwo, during a return courtesy visit by the SEC DG, Mr Mounir Gwarzo both men committed themselves to working together to ensure that the first Nigerian sukuk by the federal government comes out this year.
Nwankwo had reportedly told his guest that the plan and dream to issue the first sukuk has been on for three years now and that SEC's support was needed to make it happen.
On his part, SEC's Gwarzo was very much game and would establish interface between both organisations and arrange for a nominee DMO staff to participate in the subcommittee on non-interest products of the Capital market committee.
They were both convinced that in spite of low crude oil prices, Nigeria's sukuk should attract investors from the Gulf countries like United Arab Emirates which Buhari visited recently and other still comfortable Arab countries.
It will be recalled that in 2013 SEC came out with rules and regulations guiding issuance of non- interest bearing financial products in Nigeria. Taking advantage of this the Osun state government had issued the very first sukuk to raise successfully N11.4bn.
Meanwhile, Nigeria issued its first two conventional interest bearing bonds this year on January 20 2016.
Both were for N40bn each. The first one was 15.54% FGN 2020 to be redeemed February 13, 2020. According to the DMO, there 167 bids recorded for this and 103 were successful resulting in the allocation of N40bn out of N74.4bn subscribed for at marginal rates of between 12.24 and 12.5%.
The second one was a 10 year Bond 12.5% FGN 2026 also issued January 20 to be redeemed January 22, 2026. In all, there were 155 bids for this with only 82 successful leading to allotment of N35bn out of N74.99 bn subscribed.

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