The Nigerian Senate has called for the adoption of municipal bonds and Sukuk financing as a sustainable solution to funding local government infrastructure projects, describing them as critical tools for accelerating economic growth and reducing the nation’s infrastructure gap.
Speaking ahead of the upcoming National Stakeholders’ Summit on Municipal Bonds and Sukuk, Chairman of the Senate Committee on Capital Market and Institutions, Senator Osita Izunaso, said the initiative will help Nigeria unlock fresh financing opportunities for local governments while promoting fiscal independence.
The summit, which is scheduled to hold in Uyo, Akwa Ibom State, carries the theme: “$1 Trillion Nigerian Economy: Infrastructure Financing through the Capital Market.”
It is expected to draw participants from the federal and state governments, regulators, investors, and international development partners.
Senator Izunaso stressed that traditional funding methods are no longer sufficient to meet Nigeria’s growing needs in transportation, healthcare, education, housing, and water supply.
He explained that municipal bonds and Sukuk—financial instruments that have been deployed successfully in other parts of the world—can provide long-term, market-based financing for local governments.
“These instruments offer sustainable, market-based alternatives to traditional funding and have been successfully deployed globally,” Izunaso noted.
“Empowering local governments to access the capital market will reduce their over-dependence on federal allocations, boost fiscal autonomy, create jobs, and accelerate Nigeria’s target of building a $1 trillion economy.”
The Director General of the Securities and Exchange Commission (SEC), Dr. Emomotimi Agama, echoed this position, warning that Nigeria’s widening infrastructure deficit requires urgent and innovative solutions.
“Infrastructural gaps in Nigeria can be met effectively through capital market funding,” he said.
“This summit will create the necessary awareness among stakeholders on the benefits of municipal bonds and Sukuk.”
Dr. Agama explained that bonds are long-term debt instruments used globally by governments and corporations to raise funds for development, offering investors stable returns while providing communities with critical infrastructure.
He added that the Nigerian bond market has become increasingly attractive and emphasized that all tiers of government should take advantage of the capital market to fund developmental projects, especially in light of dwindling revenues.
Organizers of the summit said its primary objective is to build a robust municipal bond and Sukuk market that will allow local governments to directly mobilize funds for infrastructure projects without relying solely on federal transfers.
This model, they argue, will deepen Nigeria’s capital market, stimulate private sector participation, and enhance investor confidence in the country’s financial system.
Industry analysts believe that, if effectively implemented, municipal bonds and Sukuk could transform Nigeria’s infrastructure landscape.
For instance, projects such as intra-city roads, public hospitals, schools, clean water supply, and housing schemes could be financed directly at the grassroots level, ensuring faster delivery and greater accountability.
Globally, municipal bonds have been used successfully in the United States, India, and South Africa to finance urban development.
Sukuk, a Shariah-compliant financial instrument, has gained traction in Malaysia, Indonesia, and the Middle East as a preferred financing tool for infrastructure.
Experts say Nigeria’s adoption of these instruments could attract foreign investors from Islamic finance hubs, while also tapping into domestic capital pools such as pension funds and insurance companies.
The Senate’s push for municipal bonds and Sukuk underscores Nigeria’s urgent need to diversify infrastructure financing beyond federal allocations and external borrowing.
With over 200 million citizens and rapidly expanding urban centers, local governments must be empowered to fund and manage critical development projects.
As the summit in Uyo approaches, stakeholders are hopeful that the discussions will lay the groundwork for a practical framework to launch Nigeria’s municipal bond and Sukuk markets—an initiative that could reshape the country’s infrastructure financing landscape and strengthen its march toward becoming a $1 trillion economy.