Islamic Financing Through Sovereign Ṣukūk: Advancing Sustainable Road Infrastructure in Nigeria

Purpose: The research aims to provide additional insights to practitioners and professionals in the ṣukūk markets on its effectiveness in financing economic projects. It further aims to provide evidence-based information to the policymakers on the link between sovereign ṣukūk and infrastructure development using a case study of Nigeria's road sector ṣukūk. Methodology: In respect of methods, the research employed qualitative methods including document analysis and case study methods. Findings: The results showed that sovereign ṣukūk were economically and financially viable in financing infrastructure. Regarding the road infrastructure deficit, ṣukūk funded only 8.6% of the federal road's deficit. The ṣukūk projects covered 1,882 km, which represented 97.7% completion rate in a four-year period. This success was because the ṣukūk issuances were directly linked to project execution and completion. Otherwise, the instrument will not appeal to ethical investors. At the same time, ṣukūk benefits the country by ensuring project continuity. Research Limitations: The research is limited by short span time series data on sovereign ṣukūk whose issuance began in 2017. This constrained the authors from applying mixed method research. Practical and Social Implications: The research contributes to the empirical evidence on the practical utility of sovereign ṣukūk in a developing economy with limited fiscal space and limited infrastructural capacity. It highlights the significance of ethical financial instruments tied down to project implementation in Nigeria.