Aregbesola Goes for N10 billion ‘SUKUK’; a form of Sharia Loan https://bonds.nyx/products/eu-products/sukuk Persistent allegation that Ogbeni Aregbesola wants to Islamise Osun State has entered another controversial gear as the Osun State government plans to issue Nigeria’s first sukuk bond, starting with 10 billion naira ($62 million), before the end of July, a banking source close to the deal told Reuters on Tuesday. The planned 7-year paper would be the first sukuk bond to be issued in Africa’s second-biggest economy and is part of a 60 billion naira debt raising programme by Osun State, which started last year, the banking source told Reuters. The funds will be used to finance the construction of education projects, the source said.The governor at a recent parley with the media at its quarterly ‘Ogbeni Till Dawn’ programme admitted to a debt stock of N30 billion. It would be recalled that the State took another N30 billion bond in the Nigerian capital market last year, this will mature in 2019, long after Aregbesola would have been flushed out of power. It has been estimated that Osun State owes over N200 billion debts. However, Sukuk comes with its grave consequences for Osun state. It is akin to when General Babangida enlisted Nigeria in the Organisation for Islamic Countries (OIC). The following explains the strings attached to the loans: Sukuk Must Comply To The Underlying Shariah Principles 1. Funds raised must be used for Shariah compliant (halal) activities 2. Fund raised may be used to finance needed tangible assets. Specificity of assets is important, since Sukuk unlike conventional bonds cannot be used for general financial needs of the issuer. 3. Income received by sukukholders (investors) must be derived from the cash flows generated by the underlying. 4. Sukukholders have a right to the ownership of the underlying asset and its cash-flows. 5. Clear and transparent specification of rights and obligations of all parties to the transaction, in particular the originator (customer) and sukukholders. 6. No fixity in returns The Osun bond will be issued through a book-building process which will earn a return for sukuk holders via a semi-annually paid rent structure called the Ijara, the source said, targeting local pension funds and international investors on the bond. With a tainted credibility in the local money market and several projects gaping for completion, Ogbeni Aregbesola is getting more and more desperate. He knows that time is running out and he is swallowing his earlier words not to borrow beyond his tenure. He has borrowed even beyond a gratuitous second term; which is a mirage. The good people of Osun State should start asking questions. Our state is not a Shariah state and Aregbesola should stop playing politics with religion.
Posted on: Sat, 06 Jul 2013 23:15:18 +0000
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