NIGERIA'S SUKUK 11

Last week Nigeria's. Department of Debt Management (DMO) released the nation's second attempt to raise non interest bearing Islamic loan from the public.

Like the first one released in September last year, SUKUK 11 is trying to raise N100 bn but this time, at 15.743% for 7 years .

The first one was for 16.47% and according to the DMO, was oversubscribed by 5.8% and two rentals due have been paid so far.

Both funds are targeted at road infrastructural development across the country in the six geopolitical zones.

Unlike conventional Federal government bonds, the Sukuk bonds tied specifically to particular road projects and within the 7 years, the transaction holds, the lands on which the repaired or constructed is becomes property of government owned Sukuk special vehicle company .

It is to this company the government pays tentals which enable Sukuk holders to be paid what is due to them every six months in this case 15.743% yearly.

At the end of the 7 years, government will repurchase rights over the land by paying full value of the Sukuk.

Technically, the main difference between the Sukuk bond and conventional one is tying of the funds to specific projects which can be considered leased and from the lease income will be enough to share.

If not, the same government guarantees returns of stated % per annum whether you call it interest or rental income, it does not really matter. Both are dangling returns before investors.

Interested investors can invest minimum of N10,000 and multiples of N1000 thereafter through forms obtainable from started outlets and payments are to be made through stated banks as well.

One wonders though if it would not have been more inclusive in Nigeria overdosed by dividing factors, to have taken the good points in Sukuk while avoiding Muslim terminology? 

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