Mobile Sukuk are far and few between with only two sovereign issuers so far — Islamic finance heavyweights Indonesia and Malaysia — but Nigeria could potentially enter the arena as IFN Fintech learns that the West African nation is preparing to put together the digital architecture required to sell Sukuk over a mobile platform.
The motivation behind exploring mobile Sukuk is driven by the government’s development agenda, particularly financial inclusion. It is hoped that by going digital, the investor pool for the government’s Sukuk program would be more accessible to retail investors, a market segment which has been growing with every subsequent offering.
Nigeria first entered the sovereign Sukuk market in 2017 with a NGN100 billion (US$242.34 million) paper which saw about 5% of total subscriptions taken up by individual investors. The proportion of retail investors to institutional investors more than tripled to over 17% the next year, and almost reached 20% in the latest offering closed in 2020. The increasing interest from individual investors is by design: the Debt Management Office (DMO) has been investing more resources to educate and attract everyday Nigerians about this investment opportunity and believes selling Sukuk through mobile platforms could be the next step forward.
Patience Oniha, the director-general of the DMO, at IFN OnAir Nigeria Roadshow last month confirmed that the DMO had begun working on mobile Sukuk since last year, engaging its African peers on the potentiality of mobile bonds.
“We have looked at working with three companies which provide this service and we have zeroed in on one and we are finalizing the documents. This would not only apply to Sukuk, but also savings bonds — our two primary focus for retail investors,” Oniha shared, without outlining a specific timeline for this to materialize.
The Nigerian government is expected to issue another Sukuk in the third quarter. In the realm of mobile bonds, Kenya is in the lead having pioneered the asset class back in 2017. The Indonesian government made history by being the first government to sell Sukuk to retail investors via mobile platforms in 2018, and Malaysia followed suit last year with its landmark digital Sukuk Prihatin.