Nigeria Seeks Stronger Collaboration with Islamic Development Bank

The federal government actively seeks to boost its collaboration with the Islamic Development Bank (ISDB) to support the Nigerian economy.

On May 13, the Vice President of Nigeria, Kashim Shettima, received a delegation from the Islamic Development Bank led by the Head of its Regional Hub, Mr Hammad Hundal.

During their meeting, the VP declared that “now is a great time to invest in Nigeria.” The VP also stated that President Tinubu is implementing critical reforms to create a conducive environment for investment in Nigeria.

The bank presented its Nigeria’s Engagement Framework to the Vice President. The CEF highlights key strategic objectives of promoting recovery, tackling poverty and building resilience, and driving economic growth. Thus, Nigeria seeks to boost its collaboration with the Islamic Development Bank.

Shettima’s appeal to the Islamic Development Bank comes as the government seeks investments in critical economic sectors. These include human capital development, agriculture, health, education, nutrition, and digital trade.

Founded and based in Jeddah, Saudi Arabia, the Islamic Development Bank has been a longstanding partner of Nigeria. Nigeria became a member of the Islamic Development Bank in 1975, the year the bank was established.

The ISDB has supported major transport, energy, and water projects in Nigeria. Key projects include Zaria Water Supply and Sanitation Project to finance the expansion of clean water access in Kaduna State. Another is the Polio Eradication Program – Funded the program via the Lives and Livelihoods Fund, supporting vaccine production and distribution.

Sectoral Opportunities For Nigeria-Islamic Development Bank Collaboration

During the meeting between Shettin and the ISDB, the VP urged the bank to invest in key government programmes such as the Special Agro-Processing Zones (SAPZ) programme. Other investments include the i-DICE project and initiatives like developing a Halal economy in Nigeria.

Nigeria’s collaboration with the Islamic Development Bank comes amid plans to strengthen food security through the Special Agro-Processing Zones (SAPZ).  The program launched in 2022 with $210 million from the African Development Bank and support from the Islamic Development Bank and others. SAPZ seeks to combine the production, processing, storage, transport, and marketing of commodities.

The aim is to increase productivity and reduce logistics costs. The first phase of the Special Agro-industrial Processing Zones program project includes eight states:

• Cross River: (cocoa, rice, and cassava)
• Imo: (beef and dairy livestock)
• Kaduna: (tomato, maize, and ginger)
• Kano: (rice, tomato, groundnuts, and sesame oil)
• Kwara: (livestock)
• Ogun: (cassava, rice, poultry, and fisheries)
• Oyo: (cassava, soybean, rice).

The SAPZ program is also being rolled out in Abuja (beef and dairy livestock). 

The Vice President also invited the bank to partner in the iDICE Programme (Innovation, Digital Economy and Creative Enterprises). This initiative seeks to boost Nigerian startups in fintech, health tech, and edtech.

Launched in March 2023, iDICE is supported by a substantial funding pool of $618 million. Key financial sponsors include the African Development Bank ($170 million), Agence Française de Développement ($116 million), the Islamic Development Bank ($70 million), the Bank of Industry ($45 million), and private sector investors ($217 million)

Nigeria’s Vision for a Halal Economy

Another area of potential collaboration between Nigeria and the Islamic Development Bank is the development of Nigeria’s Halal economy. This involves investment in critical sectors that comply with Islamic ethical and legal codes. These include Halal food, Islamic finance, and pharmaceuticals. With the largest Muslim population in sub-Saharan Africa, Nigeria is a significant untapped market regarding Halal. On May 12, the government opened a ₦300 billion Sukuk subscription offer to fund the construction and rehabilitation of key roads and bridges across the country’s six geopolitical zones. These show that Islamic instruments can drive infrastructure finance.

Geopolitical Implications

This engagement with the Islamic Development Bank reflects Nigeria’s push to diversify its international economic partnerships, especially with the Middle East.

As Western countries review their development financing amid new geopolitical tensions, Nigeria is turning to other emerging institutions for development financing.

Key institutions include the Asian Infrastructure Development Bank, BRICS New Development Bank (when it becomes a member), and others.