FG, ISLAMIC BANKS DEEPEN PARTNERSHIP TO FUND MAJOR ROAD PROJECTS ACROSS NIGERIA

Under the new framework, Nigeria will leverage Shariah-compliant financing vehicles — including sukuk (Islamic bonds) and other non-interest instruments — to mobilise private capital and institutional investment for road construction and rehabilitation. The government says this approach will help close the infrastructure funding gap while providing ethical investment opportunities.

Officials say that the financing model will focus on major highway links, bridges and access roads across all six geopolitical zones. For example, past issuances of sovereign sukuk have been used to fund hundreds of kilometres of road works, demonstrating the viability of this model.

A senior finance ministry official described the partnership as “a strategic move to tap alternative capital markets, align with ethical finance principles and accelerate infrastructure delivery with accountability.” He emphasised that partnering with Islamic banks and development-finance institutions enables the government to spread risk, reduce reliance on conventional debt and engage a wider pool of investors.

Key advantages cited include building long-term infrastructure with stable financing that aligns with asset-backed, non-interest principles; attracting institutional and global investors interested in Islamic finance products; facilitating large-scale road-project funding without immediate heavy pressure on the budget or conventional borrowing limits; and enhancing transparency via clearly structured financing vehicles dedicated to specific infrastructure assets.

However, analysts caution that success will depend on several factors: ensuring proper governance of the financed assets; regularly monitoring completed works for value-for-money; coordinating between multiple agencies (Ministry of Works, Finance, Debt Management Office); and ensuring the road projects selected are financially and economically viable to generate returns (such as tolls or user fees) where required.

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The government’s push fits within a broader policy to deepen Nigeria’s Islamic Capital Market segment and mobilise private capital for infrastructure, while also responding to increasing investor demand for ethical, non-interest products.

As the partnership framework takes shape, the immediate next steps will involve selecting pilot road corridors for financing via Islamic instruments, issuing the relevant financing certificates or partnership agreements, engaging Islamic banks and developers, and launching procurement processes for the road construction and rehabilitation works.

If properly implemented, the partnership could pave the way for Nigeria to finance more of its infrastructure needs through innovative capital-market instruments, reduce conventional debt pressure, and set a precedent for infrastructure financing across Africa.