Jaiz Bank Nigeria Plc, the largest Islamic lender in Africa’s most populous nation invested a net sum of N89.48 billion in Sukuk issued by the Federal Government of Nigeria (FGN).
A pledged Sukuk of N14.1 billion Sukuk as collateral for the year to the Nigerian Interbank Settlement System (NIBSS), Interswitch Nigeria Limited, Unified Payment Services Ltd, and other entities for collections and various transactions.
The pledge Sukuk are used to maintain continuous access to the collection and settlement platforms, as well as the underlying transactions.
Sukuk are Islamic financial certificates, often referred to as “Sharia-compliant” bonds, which represent ownership in an asset or a pool of assets, rather than debt. Unlike conventional bonds, which are debt obligations, sukuk holders are entitled to a share of the revenue generated by the underlying assets.
The Federal Government of Nigeria (FGN) Sovereign Sukuk is a type of Islamic bond, or “sukuk,” issued by the Federal Government of Nigeria (FGN) to raise funds for infrastructure development.
It’s a Sharia-compliant way for the government to borrow money without paying interest, which is prohibited in Islam. Instead of interest, investors receive a rental payment based on the Sukuk’s underlying asset, which is often a lease on government-owned infrastructure projects.
A cursory look at the financial statement of Jaiz Bank shows total investment in Sukuk has hit N350 billion. A breakdown shows FGN Sovereign Sukuk at N230.04 billion; State Sukuk, N3.90 billion, and IILM Sukuk, N115.15 billion
Nigeria’s Islamic finance industry is likely to expand in 2H25-2026 on the back of increasing sovereign sukuk issuances and Islamic banking assets, driven by new paid-in capital requirements and regulatory moves to develop the industry, Fitch Ratings says.
Fitch Ratings-Dubai/Toronto/Jakarta-03 June 2025: Nigeria’s Islamic finance industry is likely to expand in 2H25-2026 on the back of increasing sovereign sukuk issuances and Islamic banking assets, driven by new paid-in capital requirements and regulatory moves to develop the industry, Fitch Ratings says.
In May 2025, the government returned to the sukuk market after two years of no issuance.
There was also structural improvement after the central bank introduced new Islamic liquidity management instruments in the form of non-interest financial institution’s master repurchase agreement, non-interest asset-backed securities and non-interest notes.
This addresses a market gap and provides Islamic banks with options to seek funding and invest their liquidity, which could support their credit profiles.
Nigeria has notable potential for Islamic finance supported by having one of the largest Muslim populations globally and a significant unbanked population.
Still, Islamic finance in the country is still expected to be significantly smaller than that of conventional financial institutions, with the industry facing key challenges, such as lack of awareness, strong opposition from segments of the public, limited product availability and distribution channels, still-developing regulatory framework and limited Islamic banks (non-interest banks).
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