Between Promise and Practice: A Critical Analysis of Nigeria's Sovereign Sukuk Program for Infrastructure Development

Abstract

Nigeria's turn to sovereign Sukuk since 2017 responds to a severe infrastructure deficit, chronic fiscal volatility linked to hydrocarbon dependence, and the need to diversify the government's investor base beyond conventional debt. This study critically examines whether the resulting instrument's transactional structure genuinely embodies the foundational tenets of Islamic finance or merely replicates conventional debt under an Islamic label. This scholarly inquiry undertakes a critical doctrinal dissection of the programme, widely touted as a panacea for the nation's infrastructure deficit. The research posits that while the programme's market success evidenced by prodigious oversubscription rates is incontrovertible, its underlying structural fidelity to the foundational tenets of Islamic finance remains profoundly contentious. Employing a rigorous doctrinal methodology, this paper deconstructs the transactional architecture of the Sukuk issuances from 2017 to 2023, with particular scrutiny on the pervasive and doctrinally problematic Purchase Undertaking. The analysis is framed within the dual theoretical prism of Agency Theory and the higher objectives of Islamic law (Maqasid al-Shari'ah). The findings reveal a fundamental dissonance: the Nigerian model, in its current iteration, effectively functions as a sovereign-guaranteed, fixed-return instrument, thereby negating the core Islamic principle of risk-sharing and reducing the underlying asset to mere legal collateral. The paper concludes with an unequivocal assertion: for Nigeria's Sukuk market to achieve not just commercial viability but also religious legitimacy, a paradigm shift towards authentic asset-backed, risk-sharing structures is imperative, demanding immediate regulatory fortification and a reorientation of market practice to align with the ethical imperatives of Maqasid al-Shari'ah.