Sukuk As an Alternative Financing for Small Farmers' Agricultural Development in Nigeria

Abstract

The agricultural sector occupies a strategic and essential position in Nigerian economic development. The function of the agriculture sector is to improve economic development, provide food security, increase income, alleviate poverty and provide environmental assistance. Nevertheless, this sector's contribution to the country's GDP is small, which stands at 24.18%. Therefore, this study aims to conceptually explore Sukuk’s role as an alternative for small farmers in the country. The method adopted by the researchers is the review of the previous literature to assist the study in understanding the role of Sukuk as an alternative for agricultural sector development. One of the problems facing the agricultural sector is the non-availability of financing. Easy access to financing not only assists in enhancing the farmers’ productivity but also enhances social indicators in the long run. Consequently, integration between the agricultural sector and the Islamic capital market is necessary. The current study tries to develop a scheme of financing depending on Sukuk Salam, which could be used to develop agriculture. The study, therefore, proposes the Sukuk Salam model that can be utilised to finance small farmers. The novelty of this study depends on the model proposed (i.e. Sukuk Salam financing) for small farmers. Hence, government commitment is profoundly required.