FG stokes controversy with Islamic bond proposed for 2017

Islamic bond

Federal Government’s planned introduction of first Islamic bond in the domestic market, through the Debt Management Office (DMO), has received negative reviews from the Christian community.

According to the DMO, government has perfected plans to see to the implementation of the financial instrument, popularly known as “Sovereign Sukuk” as part of the programmes aimed at raising needed funds for the 2017 budget.

Expectations from the Office is that given the support other countries have drawn from the Islamic-driven instrument, Nigeria will rake in about $1 billion from the sale of the bond in its market.

It would be recalled that the country is already on the verge of having its $2 billion Eurobond executed when it goes on sale also in January 2017.

However, some interest groups, especially from the Christian fold, have already expressed reservations with the planned introduction of a religiously-biased economic measure to solve Nigeria’s recession, though the official size of the deal is yet to be finally determined.

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A spokesman of the Christian Association of Nigeria, North Central Zone. Joseph Odeh condemned the measure, saying that it would distort the stability which the financial sector has been enjoying.

He said, “Nigerians are still recovering from the shocking news that the CBN Governor (Godwin) Emefiele had been elected the chairman of Islamic banking institute, and to hear that Islamic bond will be introduced into the system also is to overstretch the patience of many.”

But a senior government official said the plan is still in progress with only a committee set up to advise the relevant authorities on the workability of the programme.

He added that the bond is part of a plan by the government to have alternative sources of funding the budget in readiness for any disappointment from known credit institutions where loan facilities are anticipated.

The CBN had in October 2017 issued guidelines limiting commercial banks’ investment in Islamic bonds, when some northern regional governors opted for the bond, thereby limiting patronage by only 10 per cent for a 10-year maximum period.

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