Ṣukūk as a Catalyst for Green Infrastructure Financing in Nigeria

Abstract

The escalating challenges associated with urbanisation, climate change, and environmental degradation necessitate the urgent implementation of sustainable development solutions in developing economies, particularly Nigeria. Green infrastructure, encompassing both natural and engineered systems that mitigate environmental challenges and enhance urban resilience, remains severely underfunded, with existing financing mechanisms proving inadequate to meet Nigeria’s sustainability needs. Despite its recognised potential, the financial constraints associated with green infrastructure development continue to impede its widespread adoption. This study examines the role of Ṣukūk (Islamic bonds) as a catalyst for green infrastructure financing in Nigeria, evaluating the extent to which Ṣukūk can bridge funding deficits and accelerate the transition towards sustainable urban development. The research adopts a qualitative methodology, employing a comprehensive review of relevant literature, policy analysis, and case studies of successful Ṣukūk issuances in other jurisdictions. The findings indicate that, although Nigeria has demonstrated an increasing interest in Islamic finance, Ṣukūk remain an underutilised mechanism for financing green infrastructure. The study identifies critical barriers to the adoption of Ṣukūk for green infrastructure financing, including limited awareness, regulatory constraints, and market inefficiencies. However, it also highlights emerging opportunities, such as increasing demand for sustainable investments and the alignment of Ṣukūk principles with both Islamic ethical finance and environmental sustainability. The study concludes that Ṣukūk presents a viable Sharī‘ah-compliant financing mechanism capable of bridging Nigeria’s green infrastructure funding gap, advancing environmental sustainability, and attracting ethical investments. To facilitate the adoption of Ṣukūk for green infrastructure financing in Nigeria, the study recommends strengthening institutional frameworks, enhancing regulatory support for Green Ṣukūk issuance, and fostering public-private partnerships to attract sustainable investment.