SUKUK: AN ALTERNATIVE SOURCE OF FUNDS FOR GOVERNMENT IN NIGERIA

Government in Nigeria be it federal state or local are always faced with similar problem of funding. Islamic financial instruments have been regarded as an attractive alternative to traditional financial instruments. The funding requirement by the government are available but not necessarily healthy and cheap as they are mostly being characterized with high interest rates, unimaginable charges or even stringent repayment plans. Also Islamic financial instrument such as Sukuk generated a lot of controversies since its introduction. Secondary data such as existing literature and other relevant previous studies were reviewed in this paper and a qualitative descriptive analysis was used to analyze the data. The study finds out that Sukuk bonds are alternative to conventional bonds and will be better received in a state or environment like Nigeria where we have over 80 million Muslims and even by non-Muslims who understands its application. However, this paper recommends that the Nigerian government should capitalize on the issuance of Sukuk to finance some major Infrastructural projects and also introduce more non-interest financial products into the market.