The emergence of Sukuk remains an important landmark in Islamic capital market and has maintained its position as a major growth driver in the Islamic Financial Services Industry (IFSI). This is owing to its ability to raise financing under Shari’ah permissible modes while maintaining link between the real economy and the financial sector. 

Though, the origin of Sukuk is dated back to the 7th Century AD in Syria, the history of Islamic Securities Issuance in Iran dates back to 1994. The first Sukuk was issued in Iran capital market on March 12, 2011 and it was worth 297,500 million IRR to finance Mahan Air. 

Back in 2013, the first Sukuk Bond in Nigeria was issued by the Osun State Government. It was an Ijarah Sukuk of $70.6million deployed towards infrastructural projects. The Federal Government stepped up this trend with issuance of a Sovereign Sukuk in 2018. Since then the country has continued in that path.

According to the International Islamic Financial Market, a Sukuk is an Arabic term for financial certificate. It is defined as “Certificates of equal value representing undivided shares in ownership of tangible assets, usufructs and services or (in the ownership of) the assets of particular projects or special investment activity”. 

Global Sukuk issuance showed an increase of around 20% i.e. from $145.702 billion in 2019 to $174.641 billion in 2020. It steadily gained momentum in 2021 to set a new record of 39% growth to $250 billion. Most of the new issuances were from Indonesia, Malaysia, the GCC countries (Arab states), Turkey and Pakistan.

The Global Sukuk market has grown into maintaining its attractiveness for both Issuers and Investors, both in domestic and International Sukuk markets. Leaders, both in politics and business around the globe have long started to fight climate change and designed policies and regulations to promote greener economies. 

Since a Green Sukuk complies with the green principles similar to a green bond, it ensures the channeling of funds towards environmentally sustainable projects. Also, it combines the environmental principles of the green bond and the Shari’ah compliant financial structure of the Sukuk.

Going forward, building the ecosystem and infrastructure of green energy markets through issuance of Green Sukuk is vital. No doubt, it offers a value proposition of combining social value with commercial and investment goals.