SEC Commends DMO, CBN, PENCOM On Sukuk

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by OLUSHOLA BELLO and Bukola Idowu

The Securities and Exchange Commission (SEC) has commended the Debt Management Office (DMO) on arrangements to issue the maiden N100 billion Sukuk in the Nigerian Capital Market.

In a statement by the SEC, it states, “This is a major milestone for Nigeria as it will catalyze the development of non-interest capital market products. The issuance of this Sukuk follows diligent advocacy efforts from the Securities and Exchange Commission (SEC) on the need to issue the instrument in order to serve as an alternative product for investors”.

Sukuk, the non-interest equivalent of bonds, is becoming increasingly attractive as a preferred option for funding infrastructure development and indeed economic growth across the globe.  Several countries across diverse continents have increasingly issued non-interest financial instruments to fund their infrastructure deficit. The trend is also fast gaining pace in Africa, with notable Sukuk issuances by South Africa, Senegal, and the Government of Cote d’Ivoire.

As the federal and state governments seek alternative funding sources for infrastructure, Sukuk is considered as a viable option.

In 2013, the SEC had issued Rules on Sukuk Issuance in Nigeria following which the State Government of Osun raised N11 billion in Nigeria’s first Sukuk issuance which was oversubscribed.

In ensuring that the Nigerian capital market plays a significant role in the success of Nigeria’s maiden sovereign Sukuk issuance, the Securities and Exchange Commission (SEC) supported the Debt Management Office (DMO) specifically in the area of capacity building and participation at the Capital Market Committee’s sub-committee on non-interest products.

This journey has led to this historic proposed issuance of Nigeria’s N100 billion, seven years Sukuk, which would not only facilitate the mobilisation and allocation of funds within the economy but would serve to position the country as a gateway for foreign and domestic investors. The issuance would also further deepen the Nigerian capital market by promoting financial inclusiveness while providing an additional asset class of tradable liquid instruments for investors.

SEC commended the DMO for this laudable step while appreciating the Central Bank of Nigeria (CBN) for releasing guidelines on granting liquid asset status to Sukuk.

Meanwhile, the director-general of Debt Management Office, Dr. Abraham Nwankwo said the DMO has concluded arrangements to issue the first Nigerian sovereign Sukuk bond  in the local market in the month of July, 2017.

Also, Nwankwo  will be retiring as the director-general of DMO on June 30, 16. He made this know, yesterday in Lagos, in commemorating his exit on the Nigerian Stock Exchange (NSE). He pointed out that the Sukuk bond will be coming out any time from now, saying the DMO is at the advance state with all arrangement concluded.

He noted that, “We just issued Nigeria first diaspora bond which was successfully oversubscribed and the whole essence is to give Nigerians in diaspora an opportunity to funding the growth and development of the economy.”

He stated that, “We are to continuing opening new windows so that we give options to the government, private sector and investors to invest in the development of the economy through the capital market.

“We will make sure that all segment of economy have an opportunity to participate in the capital market for the growth and development of the economy, which is in line with the government commitment to make sure that the economy recovery and growth achieved this time around will be inclusive.”

Nwankwo said: “I am leaving behind a very strong public Debt Management Office to be reckon with in Africa and the achievements are as a result of joint collaboration with DMO staffs and capital market community.”

According to Nwankwo, quite a number of initiatives have been carried out, which are all successful because of the corporation of the capital market operators.

“Having spent 10 years in office, the major achievements we made are due to the effort of the staff of management of DMO. I want to use this opportunity to thank you immensely that the NSE and the dealing members have considered it appropriate to honour my exit as the chief executive of DMO.”

He noted that the DMO remains resilience and the teams are so great that Nigerians should expect even greater days ahead. He urged the capital market community to continue to cooperate with DMO for betterment of the economy.

Speaking on behalf of the stockbroking houses, the managing director of Highcap Securities Limited, Mr. David Adnori said, “Dr. Abrahim Okwonko has come to the end of his successful duty as a public servant and as the head of DMO, saying within these period, he has been a wonderful blessing to the capital market. He has formed enormous capital for the federal government, although utilisation of the funds formed during the period, we cannot state they were judiciously utilised.”

He added that the DMO activities under him resurrected the debt instrument in the capital market and these activities have also made the secondary market to flourish, saying it was a glorious 10 years period for the capital market as far as debt market is concerned.