How Rauf Aregbesola Sparked Nigeria’s Sukuk Revolution

By Wahab Abiona

Wahab Abiona is a lawyer, tax consultant and public affairs analyst.

When the history of Nigeria’s financial innovation is written, one name will stand out for daring and foresight: Rauf Aregbesola, the former Governor of Osun State. Long before the Federal Government embraced Islamic finance, Aregbesola broke new ground in 2013 by issuing the country’s first sub-national Sukuk bond  an ₦11.4 billion instrument that reshaped Osun’s infrastructure financing and planted the seeds of a national revolution.

No government before him had ever conceived such an idea, and none after him has pioneered anything quite like it. In terms of modern ideas and innovation in governance, Aregbesola has few equals.

Sukuk, unlike conventional bonds, is rooted in Islamic finance principles. It avoids the interest-bearing structures prohibited under Shari’ah law and instead is asset-backed, ensuring investors’ returns flow directly from the performance of the projects financed. For a country weighed down by the costs of traditional debt, Aregbesola’s embrace of Sukuk was not merely a financial experiment; it was a governance masterstroke.

The results were visible almost immediately. Proceeds from the Osun Sukuk went into infrastructure, with education as the flagship sector. Across towns such as Osogbo, Iwo, Ife, Ikirun and Ilesa, “mega schools” sprang up  modern facilities that became monuments to a financing idea many initially thought too risky for Nigeria. These schools symbolised more than brick and mortar; they embodied the possibility of linking ethical finance with social development.

For Osun, it was proof that a resource-constrained state could still dream big and deliver. The Sukuk allowed the government to provide long-term assets without the crippling burden of conventional loans, while attracting investors who sought Shari’ah-compliant opportunities.

What started in Osun soon spread. In 2017, the Federal Government issued its first sovereign Sukuk, raising ₦100 billion to fund major road projects across the country. That step confirmed that the Osun experiment was no fluke but a model. Since then, the programme has expanded steadily, financing highways, bridges and other large-scale infrastructure. States such as Lagos have explored similar instruments, while corporate issuers are showing growing interest.

Today, Sukuk is no longer a novelty. It has become a recognised part of Nigeria’s debt management framework, institutionalised by the Debt Management Office and embraced by domestic and international investors alike. From a single issuance in Osun, it has matured into a financing vehicle supporting projects nationwide.

It is worth recalling how it began. Without Aregbesola’s willingness to test the waters, Nigeria might have delayed or even missed the chance to diversify its financing tools. And while others have since copied the template, the originality of vision and the courage to start belonged to him alone.

In an era when many public officials are accused of short-termism, his Sukuk initiative stands out as an example of bold, long-term leadership. By aligning finance with ethics and development, Aregbesola not only left behind schools and infrastructure in Osun but also etched his name in Nigeria’s economic history.

The Sukuk revolution is now a national story. But its first chapter was written in Osun, by a governor who dared to think differently. For that, Rauf Aregbesola deserves recognition as one of the architects of modern Nigeria’s financial innovation.