The International Monetary Fund (IMF) has urged Nigeria and other major African economies to strengthen fiscal, monetary and governance reforms as part of efforts to improve economic stability and promote broader-based growth.

In its assessment of reform priorities across eight of the African Union’s largest economies, the IMF identified fiscal reform as a key priority in all but one of the countries reviewed. For Nigeria, the areas highlighted include tax policy, revenue collection, public financial management and more efficient government spending.

The Fund also identified improvements to monetary policy frameworks and policy transmission as priorities for Nigeria, Egypt and Ethiopia. In Nigeria’s case, it said governance reforms should include stronger fiscal transparency, better public financial management and improved anti-corruption measures.

The IMF said stronger domestic revenue mobilisation and more transparent and efficient public spending would help African economies build more resilient institutions. It argued that stronger fiscal and monetary frameworks can support sustainable and inclusive economic growth.

Nigeria’s tax reform agenda

The recommendations come as the Federal Government continues to implement a wide-ranging reform of Nigeria’s tax system. The new framework, which took effect in January 2026, is built around the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act and Joint Revenue Board (Establishment) Act.

The reforms are intended to simplify tax administration, remove overlapping taxes, improve compliance and broaden government revenue. They are also designed to reduce the regulatory and tax burden on smaller businesses.

However, businesses continue to cite taxation as a major operating challenge. The Central Bank of Nigeria’s July 2026 Business Expectations Survey found that 70.8 per cent of respondents identified high and multiple taxation as their biggest constraint, ahead of insecurity and high interest rates.

For the housing and construction sectors, the quality of fiscal policy has direct implications. Developers, contractors and property businesses operate within a wider environment shaped by taxation, public infrastructure spending, interest rates and access to finance. Changes that improve tax administration while reducing unnecessary duplication could affect project costs and investment decisions.

Monetary policy remains a concern

The IMF’s call for stronger monetary policy frameworks follows an aggressive tightening cycle by the Central Bank of Nigeria (CBN) in recent years.

After Olayemi Cardoso became CBN governor in 2023, the bank pursued tighter monetary and liquidity conditions alongside foreign exchange reforms. The measures were aimed at addressing inflationary pressures, strengthening market confidence and improving macroeconomic stability.

The Monetary Policy Rate stood at 18.75 per cent in 2023 before the CBN began raising it in 2024. The benchmark rate increased to 22.75 per cent in February 2024 and eventually reached 27.5 per cent by the end of that year.

The CBN also increased banks’ Cash Reserve Ratio from 32.5 per cent to 45 per cent in early 2024 and later to 50 per cent as part of efforts to reduce excess liquidity.

The policy environment has since moved towards gradual easing as inflationary pressures moderated and economic conditions improved. Presidential aide Tope Fasua has nevertheless argued that the country should reconsider its tight monetary stance, warning that persistently high interest rates could restrict economic expansion without delivering the desired reduction in inflation.

Financing risks and infrastructure

The IMF’s concerns also extend to Nigeria’s approach to sovereign financing. In June, the Fund cautioned the country over plans to raise as much as $5 billion through a derivatives-based financing arrangement with First Abu Dhabi Bank.

The IMF warned that such structures can expose governments to significant risks because their terms may be difficult to evaluate fully.

The Federal Government has also secured about $1.2 billion in financing from the United Arab Emirates for construction of a major section of the Lagos–Calabar Coastal Highway.

Infrastructure financing remains important to Nigeria’s wider development prospects because transport networks and public investment influence access to housing, construction activity, land values and the expansion of urban centres.

For Nigeria, the IMF’s recommendations therefore extend beyond macroeconomic indicators. Stronger public finances, effective monetary policy, transparent governance and disciplined infrastructure financing can shape the operating environment for businesses and determine how effectively public resources support economic and urban development.

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The Economic Community of West African States (ECOWAS) Bank for Investment and Development (EBID) has approved $91.6 million in financing for the construction and rehabilitation of 24 strategic road and bridge projects across Bauchi State. The investment is expected to improve transportation infrastructure, strengthen regional connectivity, and stimulate economic growth in the state.

Bauchi State Governor Bala Abdulkadir Mohammed announced the approval after signing the financing agreement with EBID. He described the facility as a significant milestone in the state’s infrastructure development agenda, noting that the projects will enhance mobility, facilitate the movement of goods and services, and improve access to rural and urban communities.

According to the governor, the road and bridge projects are designed to reduce travel time, improve road safety, support agricultural productivity, and encourage commercial activities across the state. He added that better transport infrastructure would attract private investment, create employment opportunities, and improve access to markets, healthcare, and education.

The projects form part of Bauchi State’s broader urban renewal and infrastructure development programme, which seeks to modernise the state’s transport network while supporting inclusive economic development. Authorities believe the improved road infrastructure will also strengthen links between communities and neighbouring states, boosting regional trade and economic integration.

Infrastructure experts have consistently maintained that sustained investment in roads and bridges is essential for reducing logistics costs, increasing productivity, and improving the overall ease of doing business. They note that efficient transport networks play a critical role in attracting investment and supporting long-term economic development.

Construction of the projects is expected to commence following the completion of procurement and other implementation processes, with the state government pledging to ensure transparency, quality execution, and timely delivery

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The Federal Government has intensified strategic interventions aimed at diversifying the national economy by aggressively unlocking the commercial potential hidden within the domestic solid minerals sector. Valued globally at over 750 billion dollars, the vast untapped reserves of critical minerals across various states present a vital fiscal alternative to conventional oil revenues. Through coordinated regulatory changes and targeted investor incentives, Nigeria accelerates efforts to tap into solid minerals to build a highly resilient trillion-dollar macroeconomic foundation over the coming years.

According to institutional frameworks deployed by the Ministry of Solid Minerals Development, the administrative roadmap focuses on sanitizing mining operations and eliminating illegal artisanal extraction networks. By establishing a formalized regulatory ecosystem, the government intends to attract top-tier global mining corporations and direct foreign investments into large-scale mineral processing centers. This structured formalization is projected to create thousands of skilled industrial jobs while drastically improving sub-national revenue collections across regions rich in lithium, gold, limestone, and bitumen.

To address persistent infrastructure gaps that have traditionally slowed down rural mining corridors, the state is facilitating private-public partnerships to build secure transport networks and independent power stations. Industry analysts emphasize that processing raw minerals locally prior to international export will exponentially multiply the sector’s financial contribution to the gross domestic product. Furthermore, environmental protection guidelines are being integrated directly into the licensing phases to ensure that host communities benefit directly from the industrial expansion without sustaining severe ecological damage.

International financial institutions suggest that structural transparency and long-term legal security remain critical for maintaining investor confidence within the expanding extractive market. As the country implements these far-reaching geological surveys and administrative overhauls, the non-oil sector is positioned to assume a leading role in the national development agenda. Overcoming legacy operational challenges will unlock stable capital pools, ensuring a steady transition toward an inclusive and structurally diversified economic future.

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Africa’s new MDB expands focus on housing development as the institution positions itself to support affordable housing delivery and infrastructure investment across the continent.

The newly established multilateral development bank has identified housing as one of its key areas of intervention, reflecting growing concerns over the scale of Africa’s housing shortage and the need for long-term financing solutions.

Officials involved in the initiative said access to adequate housing remains a major development challenge across many African countries, with rapid population growth and urbanisation increasing pressure on existing infrastructure and housing stock.

The bank is expected to play a role in mobilising capital for housing projects, helping governments and private developers access funding for residential developments, urban infrastructure, and related initiatives.

Stakeholders in the housing sector have long argued that one of the biggest barriers to affordable housing delivery is the limited availability of long-term financing. Many projects struggle to secure affordable funding, resulting in slower construction and reduced housing supply.

By prioritising housing, the institution aims to support broader economic development objectives while helping to improve living standards across the continent. Experts note that housing investment has a multiplier effect, creating jobs and stimulating growth in industries such as construction, manufacturing, and financial services.

Development finance experts believe the bank’s involvement could help bridge funding gaps that have historically limited the scale of housing projects in many African markets.

In addition to housing, the institution is expected to support infrastructure development and other sectors considered critical to economic transformation and sustainable growth.

Analysts say stronger access to development finance could encourage greater private-sector participation in housing delivery, particularly in underserved markets where financing challenges have slowed investment.

As African countries continue to grapple with housing shortages and urban expansion, stakeholders are optimistic that the bank’s housing mandate could contribute to increased investment and improved access to affordable homes across the region.

OUTBOUND LINKS

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BY: Laura Alakija and Mu’Awiya Yunusa

Sukuk Ijarah is one of the alternative instruments in Islamic finance which is frequently
offered around the world. It has also received encouraging…

Sukuk Ijarah is one of the alternative instruments in Islamic finance which is frequently
offered around the world. It has also received encouraging responses in the Nigerian
capital market. It is a means of raising funds and Sukuk Al-Ijarah provides an ethical, asset-backed financing model that can help close Nigeria’s 17–20 million housing deficitliquidity for economic growth.
This article examines how Sukuk Al-ijarah can be used to close the housing
infrastructure deficit in Nigeria.

The Concept of Sukuk Al-ijarah

Ijarah is lease financing form that may be applied to a particular asset. Upon maturity,
the lessor sells the asset to the lessee once all lease payments have been made. Like
other classes or types of Sukuk, Sukuk Ijarah bears a similarity to bonds.

For Sukuk Ijarah to be issued there has to be an underlying asset in which the Ijarah Sukuk
holder can hold equity.

Certificates of equal value are issued, representing a common share in the ownership of objects, usufructs or services in an investment project that are tradable in the secondary market.

Sukuk Ijarah is considered to be a flexible structure and can be used for multiple
financing needs. Various ijarah-based financing models or structures have been
proposed and implemented for different purposes around the world. Some of these
structures or models include:

ijarah muntahia bittamleek: Lease ending with the transfer of ownership. This is a
contemporary practice by Islamic financial institutions whereby it provides an option
to the customer to acquire the ownership of an asset with a low price at the end of a
specified period.

ijarah wa iqtina: Lease with acquisition. Ijarah wa iqtina is a lease together with a
promise by the lessee to purchase the asset at the end of the lease term. It is
therefore effectively very similar to a conventional finance lease or hire purchase
agreement.

Ijarah Mawsufah Fi Al-Zimmah: Forward Lease. This is an Islamic home loan based
on the concept of Forward Leasing, suitable to finance the purchase of property
which is under construction. Simply put, the monthly mortgage repayments are
considered as ‘rental’ until the final payment is made.

Al-ijarah thumma al-ba’i: Lease followed by sale. This is combination of two concepts
of Ijarah “leasing” and bay “buy.” The difference between this structure and ijarah
muntahia bittamleek is that under ijarah muntahia bittamleek, the lease agreement is
associated with the option (khiyar) to own the leased asset at the end of the lease
period while in ijara thumma bay’, the agreement incorporates the sale of the leased
asset at the end of the lease period.

The Structure of Sukuk Al-ijarah

The following six stages make up the structure of sukuk ijarah:
1. The Originator identifies the underlying project asset.
2. The originator transfers the underlying asset to the SPV to raise funds.
3. SPV issues sukuk, collect funds from investors and gives sukuk certificates to
the investors. Funds generated from the investors are made available to the
Originator.
4. SPV enters into a rental agreement with the originator for periodic repayment.
5. The rental amounts earned by SPV from the originator is distributed to the
investors.
6. At time of maturity, the SPV sells the underlying asset of Ijarah to originator
with agreed price to redeem the sukuk certificate
Sukuk Al-ijarah under the Nigerian Law

A. SEC Rules
The Rules were issued by SEC pursuant to its powers under Section 313 (6) of the
Investment and Securities Act, 2007 to regulate every sukuk issuer in Nigeria whether
government, private, indigenous or foreign entities so long as the entity is eligible to
issue sukuk.

Key terms under the SEC Rules

1. Sukuk Ijarah: The SEC rules describe Ijarah Sukuk as “certificates of equal
value which evidence undivided ownership on the leased asset and/or usufruct
and/or services and rights to the rental receivables from the said leased asset
and/or usufruct and/or services.”
2. Ijarah thummabai (lease to purchase): The Rules describe this class of Ijarah
Sukuk as “a contract which begins with an Ijarah contract to rent out a lessor’s
asset to a lessee. Consequently, at the end of the lease period, the lessee will
purchase the asset at an agreed price from the lessor by executing a purchase
contract.”
The Rules also permit issuance of forward leases with clear terms and conditions for
such a contract.

B. The Financial Markets Dealers Quotations (FMDQ) OTC Securities Exchange.
The SEC-registered self-regulatory over-the-counter securities exchange also issued
its listing rules for Sukuk in 2017 which provide detailed criteria and regulations for Alijarah Sukuk issuance among other classes of Sukuk. To be eligible for listing under
the FMDQ Listing Rules, the Ijarah Sukuk must meet the criteria outlined in Rules 1, 2,
3 and 4 of the Rules.

Development of Sukuk Al-Ijarah in Nigeria

Parallel to the increasing interest in the use of Islamic products globally, sukuk has
been identified as an alternative instrument for financing and investment. The most
commonly used and widely subscribed class of Sukuk is the Ijarah Sukuk. The first
Sukuk issuance in Nigeria was Al-ijarah Sukuk by the Osun State Government in 2013
which is also the first of its kind in sub-Sahara Africa.

The NGN60 Billion issuance was meant to fund the development of 20 High Schools, two middle level schools and two elementary schools in Osun State, Nigeria. Similarly, in 2016 the Federal Government of Nigeria (FGN) followed suit by issuing NGN100 billion sukuk ijarah for 25 road infrastructure projects throughout the federation.

The sukuk attracted an oversubscription of NGN105.9 billion, indicating investors’ desire and demand for sukuk. This first sukuk issued by FGN has raised a lot of enthusiasm resulting in two additional issuances by the FGN raising up to NGN362.5 billion through the three different issuances. Two sub-sovereign issuances were also made by Katsina State Government and most recently the Gombe State Government NGN 35billion Sukuk Alijarah. This means that the issuance of sukuk through concept of Ijarah is able to drive
the development of Islamic capital market industry in Nigeria and the country’s
infrastructure development.

Use of Ijarah Sukuk for Affordable Housing

Nigeria’s housing deficit is currently estimated to be between 17 to 20 million housing
units, the potential cost of overcoming the deficit is stated to be about NGN 6trillion.
The fact that Islamic Finance has a strong ethical focus and that so many of its core
contracts are asset-based makes property and infrastructure projects, particularly
those with a social element such as housing, very attractive to investors and
institutions.

The practical application of Ijarah Sukuk considered herein is the potential for its use
in the provision of low-cost home ownership. Malaysia, for example, has successfully
introduced and implemented Islamic Public-Private Housing Co-operative (IPHCM)
the model which is based on integration of the Ijarah Contract and other ethical
contracts. The IPHCM is a collaboration between public and private sectors.

The private sector construct low- and middle-income households whereas public sector
represents the Malaysian Federal Government and state governments.

Conclusion and Recommendation

Sukuk Al-ijarah is a competitive alternative that can be used to address the concerns
of affordable housing in Nigeria. The vast deficit in the housing sector can be closed
through the issuance of ethical financial instruments by the Federal Government or
the States. Joint venture agreements can be executed between the Federal Mortgage
Bank of Nigeria and the sub-sovereign states, with the states bearing 90% of the
equity contribution to be funded through Sukuk issuance particularly Al-ijarah Sukuk
because of its acceptability in the market.

Once the infrastructure is developed, sales from the units of houses will pay back the Sukuk with a surplus to the Government.

This funding method has indirectly made countries such as Singapore, UAE, Saudi
Arabia, Morocco, Egypt, Senegal, etc. hubs or centres that are capable of providing
profitable investment opportunities that are competitive for investors around the world.

Source: mondaq

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President Bola Ahmed Tinubu has requested the approval of the House of Representatives to secure a total of $2.35 billion from the international capital market to help finance Nigeria’s 2025 budget deficit and refinance maturing Eurobond obligations.

In a letter read on the House floor by Speaker Abbas Tajudeen on Tuesday, Tinubu also sought legislative consent to issue a $500 million debut sovereign Sukuk, aimed at funding critical infrastructure projects across the country.

According to the President, the borrowing plan is anchored on Sections 21(1) and 27(1) of the Debt Management Office (Establishment, Etc.) Act, 2003, and aligns with the provisions of the 2025 Appropriation Act, which earmarked N9.28 trillion in new borrowings to finance the fiscal deficit.

Tinubu explained that the total external borrowing would comprise $1.229 billion in fresh funds for the budget deficit and $1.118 billion to refinance Eurobonds maturing in November 2025, bringing the combined figure to $2.347 billion.

He said the refinancing move was designed to “avoid default” and conforms with global best practices in sovereign debt management. The government, he added, intends to explore multiple funding options including Eurobond issuance, bridge financing, loan syndication, or direct borrowing from international financial institutions.

“The House of Representatives is kindly invited to issue its resolution allowing the government to raise the amount through any of the following options,” Tinubu wrote, adding that the final terms would depend on prevailing market conditions.

The President emphasized that Nigeria’s standing as a regular participant in the international debt market positions it to secure favorable terms. The Federal Ministry of Finance and the Debt Management Office (DMO), he said, would work with transaction advisers to negotiate the most beneficial arrangements.

In a related request, Tinubu sought approval for the issuance of a stand-alone $500 million Sovereign Sukuk in the international capital market. The debut international Sukuk, he noted, will mirror Nigeria’s domestic Sukuk program, which has raised over N1.39 trillion since 2017 for major road and infrastructure projects.

The proposed Sukuk, the President explained, is intended to diversify Nigeria’s investor base, open new funding sources, and deepen the sovereign securities market.

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The $15 million facility aims to strengthen InfraCredit’s capital base and support its mission to bridge Nigeria’s infrastructure financing gap. This funding will enhance private sector financing for critical infrastructure projects across sectors such as power, renewable energy, telecommunications, healthcare, green housing, and transportation. As a result, InfraCredit’s funded capital base will increase to $187 million (approximately N264 billion).

Mr. Lamin Barrow, Director General of the AfDB Group, expressed satisfaction with this operation. At the signing ceremony, he stated, “Our support to institutions such as InfraCredit demonstrates the importance of promoting innovative and scalable solutions to leverage pools of capital from domestic institutional investors. This positions local capital markets as viable alternative sources of long-term funding to bridge the continent’s huge infrastructure deficit.”

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The investment underscores AfDB’s confidence in InfraCredit’s robust business fundamentals and commitment to sustainable development. By leveraging domestic capital markets, InfraCredit aims to deepen the local debt capital market, attract long-term investors, and foster economic growth. This investment aligns with AfDB’s support for InfraCredit’s Clean Energy Transition Strategy and Roadmap, as well as its green finance achievements. It reflects AfDB’s commitment to promoting low-carbon development and climate mitigation by leveraging private sector climate finance.

Over the past seven years, InfraCredit’s guarantees have facilitated access to NGN 218 billion ($445 million) in local currency finance for 12 first-time issuers and over 20 infrastructure projects. InfraCredit supported Nigeria’s first 15-year green infrastructure bond and extended corporate bond tenors to 20 years, beyond market norms.

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InfraCredit’s CEO, Chinua Azubike, commented, “We are delighted by AfDB’s confidence in our business model, which has successfully facilitated private sector investment in impactful infrastructure projects. Despite challenging market conditions, we have demonstrated strong fundamentals, solid portfolio performance, and profitability.”

The additional capital from AfDB will bolster InfraCredit’s ability to support access to long-term local currency domestic credit for its rapidly growing pipeline of infrastructure projects, currently worth over NGN 839 billion ($579 million). This will foster job creation and economic growth in Nigeria.

Mr. Solomon Quaynor, AfDB’s Vice President for Private Sector, Infrastructure, and Industrialization, added, “The success of InfraCredit has inspired the replication of its business model across the continent, a key part of our strategy for scaling up private sector financing in Africa. This is evidenced by our support for establishing a similar institution in Kenya covering the East Africa region.”

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