EXISTING LEGAL & REGULATORY FRAMEWORK FOR SOVEREIGN SUKUK IN NIGERIA

Abstract This paper critically examines the existing legal and regulatory framework governing sovereign Sukuk issuance in Nigeria, assessing its adequacy in supporting a robust and sustainable Islamic finance sector. The analysis identifies that Nigeria’s framework is not underpinned by a standalone, comprehensive Islamic finance law. Instead, it is a hybrid structure built upon the amendments to conventional statutes, notably the Investments and Securities Act (ISA) 2007, alongside guidelines issued by the Securities and Exchange Commission (SEC), particularly the Rules on Sukuk Issuance (2013). The research employs a doctrinal legal methodology, analysing primary legislation, regulatory guidelines, and offering circulars for Nigeria’s landmark sovereign Sukuk issuances. The study finds that while this adaptive framework has demonstrably facilitated successful issuances, it presents inherent challenges. Key issues include potential legal ambiguities in asset ownership and transfer central to Sukuk structures, the reliance on regulatory discretion rather than entrenched statutory provisions, and the absence of a dedicated dispute resolution mechanism for Islamic finance. The paper concludes that the current model, though pragmatically effective for kick-starting the market, may pose long-term constraints on depth, innovation, and investor confidence. It recommends the development of a more coherent and consolidated legal architecture, potentially through a dedicated Islamic Finance Act, to provide greater clarity, enhance the enforceability of investor rights, and ensure the framework’s alignment with both global Shari’ah principles and Nigeria’s unique socio-economic context. This evolution is crucial for positioning Nigeria as a regional hub for Islamic finance and leveraging Sukuk as a stable instrument for infrastructure development.