The Chartered Institute of Stockbrokers (CIS) has identified the benefits of investment in federal government’s bond called Sukuk as a wealth creation strategy in this period of COVID-19 pandemic as part of its investor education programme.
The institute, in a statement jointly signed by its President and Chairman of Governing Council, Mr Tunde Amolegbe and Registrar and Chief Executive, Mr Adedeji Ajadi urges investors to partner with stockbrokers for investment advice on the processes and procedures for investing in the financial assets.
“ Sukuk Ijarah is a fixed income security backed the Federal Government. This makes it an investment without risk as repayment of investors is guaranteed by the full faith and credit of the Federal Government of Nigeria, hence, the instrument as a gild hedge. Sukuk is highly sought after by ethical Investors. It provides a regular bi-annual tax-free payment for the period of the instrument while principal will be paid at the end of maturity period which is seven years. The profit to investors is pre-determined at regular interval to enable them enjoy steady cash flow. Sukuk helps in redistribution of wealth. It is a risk management instrument which is ideal for both speculators and investors. Speculators can sell before maturity. The instrument will help the government to finance large projects,” CIS said.
The institute explained that the federal government has promised to invest the proceeds in specific road projects across the six geo-political zones of the country for the benefit of the citizens as a whole.
“The Institute hereby encourages investors to approach their stockbrokers to learn more about this instrument prior to making their investment decision. stockbrokers are very accessible and they are professionals equipped with skills and competencies in evaluating the risk and returns associated with such an instrument and will be able to guide investors accordingly.