'Taking advantage' Lagos govt issues Sukuk bond, other instruments to fund infrastructural projects

The Lagos State Government is proposing to raise ethical and sustainable financing such as Sukuk, Green, and Blue Bonds to execute infrastructure projects that would further consolidate the State’s position as an economic nerve centre.

This was made known by the Lagos State Commissioner for Finance, Dr. Rabiu Olowo, during a training session for the Staff of Debt Management Office on Sukuk Issuance, facilitated by STL Trustees at the State Treasury Resource Centre, CBD, Alausa, Ikeja.

Olowo said that the appetite of investors across the world is for ethical and sustainable financing which, ultimately, is a win-win situation for all parties.

Dr. Olowo said, “We must recognise other innovative ways of financing and the Debt Management Office is an integral part of structuring this financing. We want to see the impact of how we can raise finance, we want to be able to dream and be a pathfinder.’’

The Commissioner thanked the management and staff of STL Trustees for the training, which is part of the State’s capacity building for Staff, and advised trainees to make good use of the opportunity to assist Lagos State in raising finance, generating wealth and bringing solutions.

Speaking at the occasion, the Managing Director of STL Trustees, Mrs. Funmi Ekundayo, said developed countries in the world use Sukuk to grow their economies, adding that investors are looking for more innovative ways of investments.

Mrs Ekundayo, “It is not possible to raise a Sukuk without an asset or project to show for it because it is ethical and fair. For a country to develop, it needs to take advantage of Sukuk financing. Issuing a Sukuk is long overdue for Lagos State Government, which happens to have raised the biggest and largest Bond Issuance in Sub-Saharan Africa.’’

She noted that STL Trustees has been part of every tranche of Bonds raised by Lagos State, which underscores the long partnership with the State.

In her closing remarks, the Permanent Secretary, Debt Management Office, Mrs. Rukayat Alake Sanusi, expressed appreciation to STL Trustees for organising the training and assured that it will be immensely beneficial to officers during the State’s maiden Sukuk Issuance.

Sukuk (Islamic bond or “Sharia-compliant” bond) is an Islamic financial certificate that represents a portion of ownership in a portfolio of eligible existing or future assets. They can be considered as an Islamic version of conventional bonds.

Sharia (Islamic law) prohibits lending with interest payments (riba), which is considered usurious and exploitative in nature. Thus, bonds are forbidden in Islamic finance.
The federal government are currently executing some major infrastructural projects with funds raised from Sukuk bonds