• President Bola Tinubu requested parliamentary approval to raise $2.8 billion, including Nigeria’s first $500 million international sukuk.

• The $2.3 billion in new loans will finance the 2025 budget deficit and refinance eurobonds maturing in November.

• Fitch Ratings upgraded Nigeria’s sovereign rating to “B” in June 2025, citing major economic reforms that improved market confidence.

Nigeria plans to raise $2.8 billion in fresh funding as part of efforts to diversify its borrowing instruments and attract capital from global Islamic finance markets.

President Bola Tinubu asked Parliament on October 7 to authorize $2.3 billion in new loans and a $500 million sovereign sukuk, marking what would be Nigeria’s first international sukuk issuance if approved.

“The objective is to make our borrowing more sustainable and cost-efficient,” Finance and Economy Minister Wale Edun said at an economic summit in Abuja, emphasizing a shift toward green bonds, diaspora bonds, and sukuk instead of traditional eurobonds.

According to Tinubu’s letter to lawmakers, the $2.3 billion borrowing will fund part of the 2025 fiscal deficit and refinance eurobonds that mature in November.

The government plans to mobilize the funds through multiple channels, including syndicated loans, eurobond sales, bridge financing via partner banks, or direct borrowing from international financial institutions.

The initiative aims to reduce Nigeria’s reliance on eurobonds while expanding its investor base to include Middle Eastern and Southeast Asian markets.

A First Step into Global Sukuk Markets

Nigeria has issued eight domestic sukuk bonds since 2017, all denominated in naira and targeted at the local market. These Sharia-compliant instruments have financed road infrastructure projects and enjoyed strong demand — the latest, issued in May 2025, was seven times oversubscribed, according to Fitch Ratings.

The planned $500 million sukuk, denominated in U.S. dollars, would mark Nigeria’s debut in international Islamic debt markets. Abuja aims to replicate the success of its domestic sukuk program abroad, potentially with support from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a subsidiary of the Islamic Development Bank.

Islamic Finance Gains Ground in Nigeria

Nigeria’s Islamic finance industry reached $4 billion in assets by May 2025, according to Fitch. Sukuk make up 54% of that total, followed by Islamic banking assets at 45%.

Despite rapid growth, non-interest banks still represent only 2% of Nigeria’s total banking assets, with five active institutions, including sector pioneer Jaiz Bank.

The Central Bank of Nigeria recently introduced new Islamic liquidity tools and raised capital requirements, measures expected to accelerate sector expansion in 2026.

“Nigeria has considerable potential for Islamic finance growth,” Fitch said, citing the country’s large Muslim population and significant unbanked demographic.

Stronger Market Confidence

The proposed operation follows an upgrade of Nigeria’s sovereign rating by Fitch to ‘B’ in June 2025. The agency praised Tinubu’s reform agenda, which includes fuel subsidy removal, exchange rate unification, and fiscal restructuring, all of which improved fiscal credibility.

Nigeria returned to international capital markets in late 2024 after a nearly three-year hiatus and now seeks to consolidate its presence as a sovereign issuer while diversifying funding sources.

The global sukuk market has shown robust growth this year. Fitch projects outstanding sukuk to surpass $1 trillion by the end of 2025, while S&P Global Ratings forecasts $190–200 billion in new issuances.

Africa, however, accounts for only 2% of the global sukuk market, underscoring Nigeria’s potential to position itself as a regional leader in Islamic finance.

This article was initially published in French by Fiacre E. Kakpo

Adapted in English by Ange Jason Quenum