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FGS N100bn Sukuk: A Good Alternative Investment Option?

What is Sukuk?

Sukuk is an Islamic financial instrument that allows investors to participate in the Islamic finance market. It is a type of bond that complies with Shariah principles, which prohibits the collection and payment of interest. Instead, Sukuk is based on the concept of "ijara" or leasing, where the issuer leases an asset to the investor and receives rental payments.

FGS N100bn Sukuk: An Overview

The Federal Government of Nigeria (FGN) issued a N100 billion Sukuk in 2017, which was the first Sukuk issuance by the Nigerian government. The Sukuk was issued to finance infrastructure development projects across the country, including roads, bridges, and other public infrastructure.

Why is Sukuk a Good Alternative Investment Option?

Experts believe that Sukuk can be a good alternative investment option for several reasons:

  1. Shariah-compliant: Sukuk is a Shariah-compliant investment option, making it attractive to Muslim investors who seek to invest in accordance with their religious beliefs.
  2. Diversification: Sukuk offers a diversification opportunity for investors, as it is not correlated with traditional assets such as stocks and bonds.
  3. Fixed income: Sukuk provides a fixed income stream, which can be attractive to investors seeking predictable returns.
  4. Infrastructure development: Sukuk can be used to finance infrastructure development projects, which can have a positive impact on the economy and society.
  5. Low risk: Sukuk is considered a low-risk investment option, as it is backed by the creditworthiness of the issuer and the underlying assets.

Expert Opinions

Several experts have expressed their views on the FGS N100bn Sukuk and its potential as an alternative investment option:

  1. Dr. Mohammed A. Bello, Director-General, National Council on Privatisation: "The Sukuk is a good alternative investment option for investors seeking Shariah-compliant investments. It offers a fixed income stream and is backed by the creditworthiness of the Federal Government."
  2. Mr. Kamarudeen Olabode, Head, Sukuk and Islamic Finance, FBNQuest Merchant Bank: "The Sukuk is a good alternative investment option for investors seeking to diversify their portfolios. It offers a fixed income stream and is Shariah-compliant, making it attractive to Muslim investors."
  3. Mr. Olumide Akpata, Partner, Olumide Akpata & Co.: "The Sukuk is a good alternative investment option for investors seeking to invest in infrastructure development projects. It offers a fixed income stream and is backed by the creditworthiness of the Federal Government."

Conclusion

In conclusion, the FGS N100bn Sukuk can be a good alternative investment option for investors seeking Shariah-compliant investments, diversification, fixed income, and infrastructure development. Experts believe that Sukuk offers a low-risk investment option with a fixed income stream, making it attractive to investors seeking predictable returns.