₦airaland Forum

FACT CHECK: Do
Sukuk bonds lead
to Islamisation?


Last week, the federal government issued a seven-
year N100 billion Sukuk bond. Patience Oniha,
director general of the Debt Management Office
(DMO), said proceeds from the bonds would be
used to finance the construction of 25 major roads
across the six geopolitical zones in the country.
Nigerians were still trying to study and understand
the concept when the Christian Association of
Nigeria (CAN) announced its opposition to it . The
religious pressure group said the introduction of the
bond was “a violation of the constitution”.


But the Muslim Rights Concern (MURIC) accused
CAN of playing up sentiments, saying Sukuk is
purely for business purposes. The Nigeria Supreme
Council for Islamic Affairs (NSCIA) also faulted the
claims made by CAN.


FIRST, WHAT IS SUKUK?


Sukuk is an Arabic term which simply means
“certificates”. According to the rules and
regulations of the Securities and Exchange
Commission, 2013, it refers to “investment
certificates or notes of equal value which
evidences undivided interest/ownership of tangible
assets, usufructs and services or investment in the
assets of particular projects or special investment
activity using Shariah principles and concepts and
approved by the SEC”.


It is a form of Islamic banking and its securities
are structured to comply with Sharia by paying
profit — not interest — generally by involving a
tangible asset such as land in the investment.


CLAIM NO. 1: SUKUK VIOLATES THE
CONSTITUTION

According to CAN, “by promoting a sectional
religious financial policy (in the name of Sukuk),
the government is violating both the spirit and the
letter of section 10 of the constitution.”


Section 10 of the 1999 constitution simply states
thus: “The government of the federation or of a
state shall not adopt any religion as state religion.”
While the constitution was not specific on what
constitutes a state religion, it also did not exclude
the option of the federal government taking up a
form of Islamic financing in its financial operation.
The section 313(6) of the Investments and
Securities Act 2007 , however, gives room for a new
provision to be made which may in effect
accommodate the introduction of Sukuk.


The section states that “notwithstanding the
provisions of subsection (1) of this section, the
commission may, from time to time, amend or
revoke rules or regulations for purposes of giving
effect to the provisions of this Bill and the rules
and regulations made thereunder”.


The subsection 1 in question states that SEC “may,
from time to time, make rules and regulations for
the purpose of giving effect to the provisions of
this Act and may in particular and without prejudice
to the generality of the foregoing provisions, make
rules and regulations; to alter or modify, from time
to time, in consultation with the minister, the
provisions of the Second Schedule to this Act
[among other provisions]).”
However, CAN is seeking that this section of the
act be repealed.

CLAIM NO. 2: SUKUK VIOLATES IMF RULES


There is also the question of the backing of the
International Monetary Fund (IMF) on the
operational basis of Sukuk in non-Islamic states/
countries.


CAN quoted the IMF as saying the issuance of
Sukuk by non-Islamic states/countries violates the
country’s religiosity and as such “a breach of the
religious neutrality of the government of such
state”.


CAN did not make reference to where it got its
information from but on the IMF website , the
organisation said the global issuance of Sukuk is
“expanding with remarkable international reach of
issuers and investors and that the trend is expected
to continue, driven, in particular, by strong
economic growth countries with large and relatively
unbanked, Muslim populations”.


The financial body also said “Sukuk resembles
public-private partnership financing whereby
investors finance the assets and then own them
which leads to real securitisation (a process of
pooling/repackaging the non-marketable assets into
tradable certificates of investment) after which
they transfer them at maturity to the government”.
The question then is: are there implications of
Islamic financing of these roads and their
subsequent ownership by the Sukuk holders? CAN
fears that the Islamic financial institutions will own
the 25 major roads after construction. There is yet
no answer to that fear.


A study carried out by a team of IMF staff on
Islamic financing showed that issuance of Sukuk
around the world has increased significantly in
Africa, East Asia and Europe – and several non-
Muslim countries.



CLAIM NO. 3: SUKUK WILL LEAD TO
ISLAMISATION


CAN also raised the alarm that Sukuk will bring
about “two laws for one nation as it shall also be
construed in accordance with the Islamic law of
Mu’amalatmaliyyah in addition to the established
laws of Nigeria”.


However, looking at the non-Muslim countries that
have issued sovereign Sukuk after Britain became
the first country outside the Islamic world to do so
in 2014 , CAN might find it difficult to make
a strong case. These countries are Hong Kong,
Kenya, Germany, Luxembourg, South Africa, Italy,
Tanzania, Russia, China, Singapore, France, Japan,
South Korea, among others. They operate the bond
with their official laws intact – they have not been
Islamised.
The problem, however, is that some of these non-
Muslim countries practising Islamic financing do
not have Islamic securitisation law and there is a
world of difference between Islamic and
conventional securitisation concepts.


A study carried out by a team of economic experts
on “legal and regulatory issues in issuing Sukuk in
Muslim-minority countries” in Hamad Bin Khalifa
University, Qatar, showed that there are existing
conflicts in the application of Islamic securitisation.
Another issue that needs to be taken into
cognisance is the fact that the funds raised from
Sukuk issuance must be used ONLY for ethical
purposes, according to information on the DBO
website .


That is to say that whatever projects the
government intends to use funds generated from
Sukuk for must be ethical.
But then, is there really a clear definition of the
adjective “ethical”?


CONCLUSION: CAN has strong claims on keeping
Nigeria’s secular nature intact, especially as the
controversy over Nigeria’s membership of the
Organisation of Islamic Conference (OIC) in 1986
remains a sore point. Nevertheless, there is no
conclusive evidence that Sukuk will lead to the
Islamisation of Nigeria — or that it violates the
constitution. One question needs to be answered
though: will the Islamic financial institutions control
the roads to be constructed with the bond in order
to recover their money under the PPP-like
arrangement?


Follow us on twitter @thecableng


https://www.thecable.ng/fact-check-issuance-sukuk-ploy-sell-nigeria-islamic-nations

Once again can uses irrational basis to oppose what it could easy challenge in courts. Evidently it serves as higher purpose or should I say lower purpose. ...setting the masses against one another.

vedaxcool:
Once again can uses irrational basis to oppose what it could easy challenge in courts. Evidently it serves as higher purpose or should I say lower purpose. ...setting the masses against one another.

let the non Muslims talk keep quiet

[s]

capatainrambo:
let the non Muslims talk keep quiet

[/s]

CAN is seriously losing it purpose because of politics. We have abandoned the real issue an now focusing on unimportant things.

I got this from my church WhatsApp group:


This is a message from a Brother who is hospitalized in LASUTH.

THIS CALLS FOR ATTENTION

I saw it in LASUTH Ikeja and I cannot keep quiet.

Every Wednesday the Muslim elders will faithfully go round the hospital to do what I call "Muslim Hospital Evangelism" praying for the sick bed to bed irrespective of your religion.

But Today I saw a new dimension of Muslim hospital evangelism. The Muslim students of LASUTH were here today to pray for the sick, bed to bed.

Meanwhile, there is a chapel inside LASUTH, I have never seen anybody from there to say they want to pray for us. Something must be done. We sit down in the church and be saying they islamized Nigeria, in fact Lagos is already islamized

Please set up a functional hospital evangelism team in your church or take it up as a ministry. They copied it from us but they are now using it better than we do.

Please don't be too comfortable in the 4 corners of your church, go out and do something for Christ. ......

vedaxcool:
[s][/s]

I don't envy muslims










because off mods I won't really say how I feel about them .

adem30:
CAN is seriously losing it purpose because of politics. We have abandoned the real issue an now focusing on unimportant things.

I got this from my church WhatsApp group:


This is a message from a Brother who is hospitalized in LASUTH.

THIS CALLS FOR ATTENTION

I saw it in LASUTH Ikeja and I cannot keep quiet.

Every Wednesday the Muslim elders will faithfully go round the hospital to do what I call "Muslim Hospital Evangelism" praying for the sick bed to bed irrespective of your religion.

But Today I saw a new dimension of Muslim hospital evangelism. The Muslim students of LASUTH were here today to pray for the sick, bed to bed.

Meanwhile, there is a chapel inside LASUTH, I have never seen anybody from there to say they want to pray for us. Something must be done. We sit down in the church and be saying they islamized Nigeria, in fact Lagos is already islamized

Please set up a functional hospital evangelism team in your church or take it up as a ministry. They copied it from us but they are now using it better than we do.

Please don't be too comfortable in the 4 corners of your church, go out and do something for Christ. ......

so na CAN send you the message for WhatsApp?

[s]

capatainrambo:
I don't envy muslims
because off mods I won't really say how I feel about them
.

[/s]

Lamentations of an accidental nairalander

MyNewJackeT:
so na CAN send you the message for WhatsApp?

Is it just comprehension you need or Plus Fasting and prayer?