Rauf Aregbesola And The Sukuk Revolution In Nigeria
- By Wahab Abiona
Rauf Aregbesola, former Governor of Osun State, is remembered for his bold and innovative approach to governance. Among his most enduring legacies is the introduction of Nigeria’s first sub-national Islamic bond, popularly known as Sukuk. In 2013, under his leadership, Osun State issued a Sukuk worth about N11.4 billion, blazing the trail for a financing mechanism that has since become a mainstay of Nigeria’s debt strategy.
A Sukuk differs from conventional bonds because it complies with Islamic law, which prohibits interest. Instead, it is asset-backed, with investors receiving returns from the performance of underlying projects. By venturing into this uncharted territory, Aregbesola not only created a fresh source of funding for Osun but also demonstrated to Nigeria’s financial regulators and investors that Sukuk could work locally.
The proceeds of the Osun Sukuk were directed at infrastructure, with education as the flagship sector. Several model high schools, often referred to as “mega schools,” were constructed across the state in Osogbo, Iwo, Ife, Ilesa, Ikirun, and other towns. These schools became the visible face of the bond, representing a tangible link between innovative finance and improved social infrastructure. The Sukuk enabled the state to deliver long-term assets without the heavy burden of conventional interest-bearing loans, while also attracting investors seeking ethical, Shari’ah-compliant opportunities.
The Osun experiment was more than a local financing decision; it became a national template. In 2017, the Federal Government of Nigeria followed the path Aregbesola pioneered by issuing its first sovereign Sukuk, raising N100 billion to fund road projects nationwide. Since then, the federal Sukuk programme has grown steadily, with multiple tranches issued to finance large-scale infrastructure such as highways and bridges. Other states, notably Lagos, have also explored Sukuk to fund their development plans, while corporate issuers have shown interest in tapping into this ethical finance market.
Today, Sukuk is a recognised instrument in Nigeria’s debt management framework, institutionalised by the Debt Management Office and embraced by both domestic and international investors. From a single issuance in Osun, it has matured into a financing vehicle supporting projects across the country.
Aregbesola’s decision to pioneer Sukuk financing underscores the power of innovative thinking in governance. By blending financial creativity with developmental needs, he not only delivered infrastructure to Osun but also left a lasting imprint on Nigeria’s financial landscape. His initiative proved that ethical, asset-backed instruments can drive real development, and it remains a landmark in the nation’s economic history.
- Abiona is an Economist, Tax Consultant and Public Affairs Analyst
The opinions expressed in this publication are solely those of the author. It does not represent the editorial position or opinion of OSUN DEFENDER.
