Why Kogi’s FAAC Windfall Makes Its Sukuk Plan Untenable

Nigeria is currently witnessing an unprecedented surge in Federation Account allocations to states, prompting renewed national scrutiny over whether rising revenues are translating into real development outcomes.

Across the country, governors are under pressure to demonstrate that expanded fiscal space is producing tangible improvements in infrastructure and living conditions. In Kogi State, this scrutiny is particularly urgent.

Despite substantial FAAC inflows and other statutory revenues received in under two years, the Ododo administration now proposes to raise an additional ₦50 billion through Sukuk bonds for an international airport and an international market—an initiative that raises fundamental concerns about governance, accountability, and fiscal priorities.

Sukuk is not conventional debt. It is not designed as a fiscal escape hatch for governments that have failed to manage existing resources. By its very nature, Sukuk financing is governed by principles of transparency, asset integrity, accountability, and public interest.

These principles exist to protect investors, safeguard the public, and ensure that borrowing is tied to real, productive value. Measured against these standards, the proposed Sukuk issuance by Kogi State raises serious red flags.

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In less than two years, the Ododo administration has received well over ₦600 billion from Federation Account allocations and other revenues, according to publicly available data. The issue, however, is not the quantum of revenue received but the outcomes delivered. On this score, the record is deeply troubling. Two years into the administration, there is little evidence of completed, commissioned projects that would ordinarily serve as markers of effective resource utilisation.

In governance, outcomes matter. Commissioned projects are not ceremonial indulgences; they are the basic evidence that public resources have been converted into public value. Roads, hospitals, schools, water facilities, and power infrastructure are the tangible indicators by which fiscal performance is assessed. The apparent disconnect between substantial FAAC inflows and visible development outcomes raises legitimate questions about delivery capacity and project execution.

This reality is central to the Sukuk debate. Sukuk requires that funds be tied to identifiable, viable assets capable of completion and productive use. It also requires that the issuer demonstrate the institutional capacity to deliver projects, manage assets, and sustain them over time. An administration struggling to show concrete outcomes from existing revenues cannot credibly assure investors of its ability to deliver complex infrastructure projects financed through ethical instruments.

Accountability further complicates the proposal. Sukuk standards demand transparency and full disclosure. Before investors are invited to commit funds, there must be clarity on how prior resources were utilised and why development outcomes appear limited relative to inflows. In Kogi State, there has been no comprehensive, publicly accessible accounting that reconciles recent FAAC receipts with measurable project delivery. Without such disclosure, any Sukuk issuance would rest on opacity, undermining the foundational principles of ethical finance.

The ethical dimension of the proposal is equally concerning. Sukuk is rooted in the idea that finance should serve the public good and avoid imposing unjust burdens. Yet across Kogi State, many communities continue to face persistent challenges in electricity supply, access to clean water, road infrastructure, healthcare capacity, and housing affordability. Poverty and hunger remain lived realities for a significant portion of the population.

Against this backdrop, prioritising an international airport raises serious questions about sequencing and necessity. Large-scale aviation infrastructure may have economic justification in certain contexts, but its relevance is weakest where basic services remain inadequate. An airport does not provide electricity to dark communities, supply water where none exists, or improve access to basic healthcare. To pursue such a project while foundational needs remain unmet is to misalign public borrowing with the public interest.

The issue of repayment further exposes the risks embedded in the proposal. Sukuk obligations must be serviced regardless of project success. Estimates in the public domain suggest annual debt service commitments running into several billions of naira over the life of the instrument. These payments would be drawn from public revenues each year, whether or not the airport generates sufficient income and irrespective of ongoing deficits in basic service delivery.

Claims that the proposed airport will generate enough revenue to service the Sukuk deserve careful scrutiny. Revenue generation from complex infrastructure depends on market demand, operational competence, regulatory capacity, and complementary infrastructure. An administration that has struggled to translate existing revenues into visible outcomes has yet to provide compelling evidence that it can successfully operate a commercially viable international airport.

The challenge confronting Kogi State, therefore, is not a shortage of funds. Increased FAAC allocations have already expanded the state’s fiscal space. The deeper problem is one of governance effectiveness, project execution, and accountability. Additional borrowing, however attractively branded, cannot substitute for institutional capacity.

Approving a Sukuk under these circumstances would do more than expose investors to risk. It would undermine the credibility of Sukuk as an ethical financing instrument in Nigeria and signal that principles of transparency and performance can be subordinated to political expediency. Regulators, issuing houses, and prospective investors must therefore apply rigorous standards rather than procedural approval.

Before Kogi State borrows another naira, there must be a full, independent, and publicly available accounting of how recent FAAC inflows and other revenues were spent and why they have not produced commensurate, visible outcomes. Until that happens, proceeding with a Sukuk issuance is difficult to justify.

The central question remains unavoidable: if substantial FAAC inflows over a short period have yet to yield clear development results, what assurance exists that ₦50 billion more will deliver a different outcome? Until that question is convincingly answered, the proposed Sukuk should not proceed. Ethical finance cannot be built on fiscal recklessness, and public trust cannot survive governance without results.

By Kogi Conscience Group