Assessing the Impact of Sukuk Bond on Road Transport Infrastructural Development in the North-Eastern Nigeria

Abstract

One of the most advanced Islamic finance instruments today is the sukuk bond, which can be used as an alternate source of funds to close infrastructure gaps in developing nations like Nigeria. Using a mixed-methods research design, the study examines both the financial mechanisms and developmental outcomes of sukuk-funded road projects. Qualitative data were collected through semi-structured interviews with four directors from Nigeria’s Federal Ministry of Works, while quantitative data were obtained from questionnaires administered to 110 members of the National Union of Road Transport Workers (NURTW) in North-East Nigeria. The research addresses two key questions: To what extent have sukuk bonds impacted road network completion and quality in the region? And what challenges have affected sukuk-funded road project implementation? Findings reveal that sukuk bonds had a positive impact on road infrastructure, with the government investing NGN 612 billion (approximately USD 1.526 billion) leading to the completion of 1,862 kilometers of roads. Major projects including Sections II and III of the Kano-Maiduguri Road achieved 100% completion, while Sections IV and V, along with the Mayo Belwa-Jada-Ganye Roads, reached 98%, 68%, and 74.4% completion levels respectively. Regression analysis shows mixed results, with some sukuk indicators demonstrating significant positive effects (p<0.05), while others showed positive but statistically insignificant relationships. Qualitative findings identified security challenges from ISWAP and Boko Haram insurgents as the primary obstacle to project completion. The study concludes that sukuk bonds represent a viable alternative financing mechanism for infrastructure development, though security and project implementation challenges must be addressed. The findings have implications for Islamic finance development, infrastructure policy, and achieving SDGs 8, 9, and 11 in developing countries.