Category: Economics

07 Oct 2018


It was a rare opportunity for me as a student to have attended Law Colloquium in Honour of retired Justice of the Supreme Court of Nigeria, Justice Kayode Eso, at Obafemi Awolowo University, Nigeria on July 25, 2006 where former Central Bank of Nigeria Governor, Prof. Chukwuma Soludo, was invited as the guest speaker. While delivering his lecture, Prof. Soludo quoted famous Danish Philosopher and Theologian – Søren Kierkegaard– that “Life can only be understood backwards; but it must be lived forwards”. He made reference to this Philosophy with respect to the socio-economic environment in Nigeria as one beckoning for a social revolution rather than ready for an industrial revolution as once argued by late Pius Okigbo. His thought inspired further discourse on the need of our dear nation to join the first world economy and subsequently place of youth in national integration and development. Thus, my focus in this paper is to identify place of Nigerian youths in colonial and post-colonial struggles and more importantly to elaborate on social inclusiveness of Nigerian youths in the emerging world order.

Another perspective to Søren Kierkegaard Philosophy essentially mirrors the struggle of our founding fathers during their youthful age towards Nigerian independence. From August 6, 1861 when The Treaty of Cession between the then Oba of Lagos, his chiefs and the British Crown was signed through 1914 when the Northern and Southern Protectorates were amalgamated resulting in the birth of Nigeria until October 1, 1960 when the union jack was historically lowered at the Tafawa Balewa Square (TBS) in Lagos, Nigerian youths have been at the forefront of national development.

Despite the discrepancies in colonial policy in terms of socio-economic projects, social development and establishment of administrative centres recognized by scholars and writers, Herbert Macaulay in his youth belief in the necessity for the people living in the British colony of Nigeria of multiple backgrounds to unite as one in order to be able to resist colonialism. This same philosophy led to the formation of National Council of Nigeria and the Cameroons (NCNC) together with Dr Nnamdi Azikwe in 1944. Thus, Herbert Macaulay became NCNC first president, while Azikwe was its first secretary.

Obviously, the role of Nigerian youths in agitating for independence cannot be underestimated. The likes of Sir Tafawa Balewa, Sir Ahmadu Bello, Chief Obafemi Awolowo together with aforementioned nationalists – Macaulay and Azikwe – including but not limited to Eyo Ita, Samuel Akisanya, Kofo Abayomi, Ernest Ikoli and H.O. Davies all of whom were at the forefront of Nigerian Youth Movement (NYM) founded in Lagos in 1933, fought in their youthful days to deliver the political independence we all enjoy today. We can easily recollect with nostalgia how a young and vibrant Nigeria’s foremost pro-democracy activities, Anthony Enahoro, in 1953 became the first to move the motion for Nigeria’s independence. Despite several political setbacks and defeats in parliament including an attempt by young SL Akintola in 1957, Remi Fani-Kayode revisited Enahoro’s motion and the motion was successfully passed by the parliament in 1958 which led to Nigerian independence on October 1, 1960.

On the other hand, the post-colonial struggles necessitate an inclusive social development for the youth. As noted by the United Nations Department of Economic and Social Affairs (UNDESA), the Focal Point on Youth aims to build an awareness of the global situation of young people, as well as promote their rights and aspirations.

Furthermore, the Agenda also works towards greater participation of young people in decision-making as a means of achieving peace and development.
Summarily, the Focal Point on Youth works to: enhance awareness of the global situation of youth and increase recognition of the rights and aspirations of youth; promote national youth policies, national youth coordinating mechanisms and national youth programmes of action as integral parts of social and economic development, in cooperation with both governmental and non-governmental organizations; and strengthen the participation of youth in decision-making processes at all levels in order to increase their impact on national development and international cooperation.

Coincidentally, the theme of the International Youth Day 2018 dwell exclusively on safe spaces for the youth whereby they can come together, engage in activities related to their diverse needs and interests, participate in decision making processes and freely express themselves. While there are many types of spaces, safe spaces ensure the dignity and safety of youth.

Moreover, Goal 11 of the 2030 Agenda for Sustainable Development of United Nations Development Programme (UNDP) specifically emphasizes the need for the provision of space towards inclusive and sustainable urbanization. Additionally, UNDP New Urban Agenda (NUA) reiterates the need for public spaces for youth to enable them to interact with family and have constructive inter-generational dialogue as we are now having with Association of Nigerian Students, University of KwaZulu-Natal Independence Day Colloquium.

Furthermore, the United Nation (UN) framework on World Programme of Action for Youth (WPAY) which is the UN framework for youth development, prioritizes the provision of “leisure activities” as essential to the psychological, cognitive and physical development of young people. The framework asserted that as more and more youth grow in a technologically connected world, they aspire to engage deeper in political, civic and social matters, and the availability and accessibility of safe spaces becomes even more crucial to make this a reality.

In February 2010, three key objectives were identified and adopted by the UN Framework for specific actions essential to implement the objectives, which are:
Firstly, create awareness by increasing commitment and investment in youth. This can be achieved by increasing recognition of youth development as a smart investment by the public and private sectors; advocating for the recognition of young people’s contributions to national and community development and to achieving the Millennium Development Goals; promoting understanding of inequalities amongst youth and how to effectively address the needs of the most disadvantaged; and fostering research and knowledge building on youth to better inform youth policies and programmes.
Secondly, mobilize and engage by increasing youth participation and partnerships. This can be achieved by institutionalizing mechanisms for youth participation in decision-making processes; supporting youth-led organizations and initiatives to enhance their contribution to society; and strengthening networks and partnerships among Governments, youth-led organizations, academia, civil society organizations, the private sector, the media and the UN system, to enhance commitment and support for holistic youth development.

Thirdly, connect and build bridges by increasing intercultural understanding among youth. This objective can be achieved by promoting youth interactions, networks and partnerships across cultures; and empowering and supporting youth as agents of social inclusion and peace.
This UN Framework also situate my submission in this paper in engaging Nigerian youths for national issues and programmes that are crucial in the prospect for nation building and national development. As a matter of utmost priority, Nigerian government should make concerted efforts in putting in place youth development structures as a catalyst for her national growth.

Above all, Nigerian youths are surely among the most talented and creative youths in the world. From Jessica Osita led five-member team of Save-A-Soul that won the 2018 Technovation Challenge in US through Aliyu Jelani, the famous Nigerian Chevrolet Car Designer at General Motors in US to Silas Adekunle who is credited for building the world’s first gaming robot thus becoming the highest paid in the field of Robotic Engineering in 2018 and several other Nigerian youths who are among “the thousands and one shining flowers in the jungle unseen” (apology to William Shakespeare) including but not limited to Dr Chukwuka Monyei in South Africa, Nigerian youths are fast learners; they have the ability to work under pressure and bring out desired result for any organization or institution.

Undoubtedly, I will like to conclude with the words of British statesman who twice served as Prime Minister of the United Kingdom, Benjamin Disraeli that: “We live in an age when to be young and to be indifferent can be no longer synonymous. We must prepare for the coming hour. The claims of the future are represented by suffering millions; and the Youth of a Nation are the trustees of Posterity.” God bless Nigeria!


[Being a keynote address delivered on September 29, 2018 at Independent Day Colloquium of Association of Nigerian Students, University of KwaZulu-Natal (ANSU), Howard College Campus, South Africa.]

25 Sep 2017

Sukuk: A Global Economic Model

On 5 March 2009, the Vatican’s official newspaper L’Osservatore Romano reported that banks should look at the rules of Islamic finance to restore confidence amongst their clients at a time of global economic crisis. Author Loretta Napoleoni and income strategist, Claudia Segre, said that “The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service.” They suggested “Western banks could use tools such as the Islamic bonds, known as sukuk, as collateral”. Historically, Catholic Church forbade usury but began to relax its ban on all interest in the 16th century.

The growth in Sukuks’ popularity can be traced back to the global financial crisis in 2008. A Sukuk is a Shariah-compliant bond. Whereas Western bonds offer to pay bondholders a rate of interest over a set period of time, Sukuks offer a fixed rate of profit. Islamic finance’s emphasis on equity and investment in the real economy provides “a stable and productive banking sector” as noted in World Economic Forum report of May 2017. “Rather than providing a lucrative financial alternative to investing in the real economy, Islamic banking complements and strengthens the latter. It ensures that financial capital does not lead to artificially bloated asset prices. Instead, it is made to work in the real economy, on real projects.”

Saxony-Anhalt became the first state government in Germany and Europe to issue a sub-sovereign bond under Islamic principles. In 2004 the Sachsen-Anhalt Government issued sovereign Sukuk worth €100 million which were listed in Luxembourg and backed by Ministry of Finance buildings. The issuance by Saxony-Anhalt attracted strong demand and was fully subscribed, with 60% of the issue going to investors in Bahrain and the UAE and the remaining 40% to investors in Europe, particularly those in France and Germany.

In 2006, US Texas-based energy firm East Cameron issued a $165.67 million sukuk through a Cayman Islands vehicle. GE Capital, the finance arm of General Electric, tapped the market in 2009 with a $500 million sukuk domiciled in Bermuda to fund a lease-based aviation deal.

In December 2007, Paris Europlace established the Islamic Finance Commission. Since then, the French financial markets regulator, the Autorité des marchés financiers (AMF), has issued two positions allowing Shariah-compliant investment funds and sukuk listings. As such, the Bourse de Paris (Paris stock exchange) has created a sukuk segment and four tax regulations have been published that confirm a parity of tax treatment with conventional financial products.

In July 2010, the French government made certain amendments to its laws in order to facilitate sukuk issuances. The amendments removed double stamp duty, the payment of a capital gains tax on property and streamlined the regulations governing estate agents. In June 2011, France witnessed the introduction of the first Islamic deposit scheme operated via the Islamic window of an existing conventional bank.

The United Kingdom was the first country outside the Islamic world to issue sovereign Sukuk set up according to Al-Ijara structure as reported by Financial Times of June 25, 2014. By issuing sovereign Sukuk the United Kingdom Government has demonstrated that it is possible to create a successful base for Islamic finance outside the Islamic world.

On 9 July 2014, Luxembourg Parliament voted a law aimed at allowing the issuance of the first Luxembourg sovereign Sukuk in response to the recent surge in investor demand from Shariah-compliant instruments. The law authorized a sale and buy-back transaction of real estate assets to a Special Purpose Vehicle (“SPV”) owned by the Luxembourg state for the purpose of issuing sovereign Sukuk with a value of EUR 200 million.

Luxembourg later became the first jurisdiction in the Eurozone to securitize three government properties, that is, the two towers of the Gate of Europe in Kirchberg and the Gutenberg building in Strassen, to back Sukuk worth EUR 200 million. Luxembourg sovereign Sukuk are set up according to the Al-Ijara structure, the most common structure for sovereign Sukuk with rental payments on property providing income for the investors.

In 2015, Hong Kong Government successfully sold its second Islamic sukuk bond to raise US$1 billion in its latest effort to promote Islamic finance in the city. It issued its first issuance consisting of a 5-year $1 billion Al-Ijara sukuk in September 2014 offering a profit rate of 2.005%. The Hong Kong Monetary Authority, which handled the issue on behalf of the government, received US$2 billion in orders from 49 global institutional investors including central banks and sovereign funds among others. The orders were double its US$1 billion issue size.

South Africa as one of the deepest and most traded emerging markets first announced it would look to issue a sukuk in late 2011, as it sought to diversify its funding sources and tap into the wealth of the Arab world. But the launch was set back in part because of delays in the identification of the asset that would back the bond.

In 2014, South Africa joined Hong Kong and the UK to become the third non-Muslim country to sell government debt that adheres to Islamic law. The $500m sale was more than four times subscribed, with an order book of $2.2bn according to the SA Treasury, indicating that appetite for emerging market Islamic bonds matches that of developed world issuance.

A recent report by credit rating agency Moody’s claimed 2014 had been a landmark year for sovereign sukuk, with sales in London, Hong Kong and South Africa indicating a significant change in the potential size, depth and liquidity of the market.

In 2016, US investment bank JPMorgan include sukuk bonds in its emerging markets indices for the first time in the year, widening the appeal of Islamic instruments among global debt investors. Islamic finance assets grew by 10% to reach $2 trillion in 2015. Islamic banking represented 73% of that figure, followed by sukuk bond which represented 17%, said the initial findings of ICD Thomson Reuters Islamic Finance Development Indicator (IFDI 2016).

In 2017, Kenyan Capital Markets Authority (CMA) lauded Government efforts to deepen Islamic Finance in Kenya, following the Presidential assent of the Finance Act 2017 confirming Kenya’s commitment to positioning itself as a regional Islamic Finance hub. Finance Minister Henry Rotich outlined the steps as part of the country’s 2017/2018 budget aiming to level the playing field between Islamic and interest-based transactions. The primary objective is to prepare the groundwork for a sovereign sukuk but also equally to attract corporate sukuk from the region.

Undoubtedly, Islamic banking is one of the fastest growing financial sectors today. According to Thomson Reuters’ projections, Islamic finance assets are projected to grow to $3.2 trillion by 2020, with Islamic banking reaching $2.6 trillion. With so much damage caused by highly complex and risky financial structures untethered to assets, it is hardly surprising that more and more investors are attracted to Islamic finance’s emphasis on real assets and greater certainty.

No wonder Giovanni Maria Vian, L’Osservatore Romano newspaper’s editor, justified the theological foundation of Sukuk regarding global finance that “the great religions – Islam and Christianity – have always had a common attention to the human dimension of the economy.” Obviously, the Federal Government of Nigeria roads to 7-year N100 billion Sukuk bond offers an avenue for a competitive alternative to the conventional banking system and a path towards sustainable economic recovery.