Amman’s JD400 million
sukuk can lower borrowing costs and free money for projects that build economic
complexity. The UAE’s retail sukuk, oversubscribed almost nine times, shows
what happens when ordinary savers are invited in.
اضافة اعلان
By Dr
Mamoun Ahmad Al-Omari
The Cabinet’s approval of a JD400 million Islamic sukuk issuance by the
Greater Amman Municipality (GAM) is an important step towards modernising
public financing in Jordan. The sukuk offer a return of 5.5 per cent a year
over five years under a lease-to-own (ijara muntahia bittamleek) structure. It
is the first issuance of its kind by a municipality in the Kingdom. As
announced, it is aimed at banks, insurance companies and savings, investment
and pension funds, which is a sensible way to launch a new instrument. The
bigger opportunity is to bring in the people whose city is being financed.
A
smarter way to manage debt
The logic is simple. GAM wants to replace part of its commercial
borrowing, estimated at 8.25 per cent, with financing at 5.5 per cent. That
2.75 percentage point gap could ease debt-servicing pressure and free money for
services and infrastructure. The announced estimates point to savings of about
JD70 million over five years, and about JD140 million if the sukuk are extended
for a further five years on the same assumptions.
The Municipality has explained that the proceeds will repay part of its
existing debt, that the principal will be repaid in full at the end of the
five-year term, and that returns will be paid periodically. The savings are
meant to help finance capital projects. That is debt management at its most
practical: replacing costly borrowing with cheaper, Sharia-compliant financing.
This is only the first step. GAM intends to issue another JD300 million
in each of 2027 and 2028, bringing the program to JD1 billion. Cheaper money,
however, is an opportunity and not yet a result. It will pay off only if
refinancing goes hand in hand with disciplined spending and control over future
borrowing. The signs are encouraging: GAM’s own-source revenues reportedly grew
by about 13 per cent over the previous year, and its 2027 budget allocates
JD177 million to capital spending on public transport, roads, waste management,
green spaces and smart-city projects.
A
market that can grow
The Central Bank of Jordan will manage the issuance, and the sukuk will
be tradable on the Amman Stock Exchange. That gives investors flexibility and
gives the capital market a new asset. A successful first issuance could
encourage other public institutions to follow. To get there, the market will
need real liquidity, transparent disclosure and efficient pricing, because a
listing opens the door to trading but does not guarantee a buyer at every
moment.
What
the UAE and London show
The UAE has already shown what happens when ordinary savers are invited
in. In June 2026 its Ministry of Finance launched the first Sovereign Retail
T-Sukuk, open to individuals through digital subscription from AED1,000. The
target was AED50 million, with a two-year tenor and a profit rate of 4.30 per
cent.
Subscription requests reached AED445 million, almost nine times the
target, and the issuance was doubled to AED100 million. Small investors led the
way: subscriptions of AED10,000 or less made up 76 per cent of demand, and
young investors under 25 and women together represented 45 per cent of
subscribers.
The second issuance, a five-year sukuk at 5.06 per cent, showed this was
no one-off. It drew orders of AED285 million, about 5.7 times its target, from
investors of 110 nationalities, and it was listed on Nasdaq Dubai in early
October. Nearly half of its subscribers had also invested in the first
issuance.
Britain’s first sovereign sukuk in 2014 pointed the same way, with
£200 million offered and orders above £2.3 billion.
Why
high demand matters: a shift in saver behaviour
The UAE’s experience shows how behaviour changes. Savers often default to
deposits, gold or cash when no simple, trusted alternative exists. Once one
appeared, with a low entry point, digital subscription and a market in which to
trade, demand arrived in force, and nearly half of the second issuance’s
subscribers were returning investors. That is the real lesson. High demand is
not just a number; it is a sign that people are ready to move from passive
saving to holding sukuk when the product is clear and credible. For Jordan,
this is encouraging. Still, Jordan should not assume the same response, since
it will depend on pricing, trust and the quality of disclosure. That is exactly
why a measured pilot makes sense.
Where
economic complexity comes in
Why does this matter beyond Amman’s balance sheet? Because economic
complexity, the range and sophistication of what an economy can produce, grows
when savings become projects that build skills and productive capacity.
Money
alone does not create it. Projects do, when they raise productivity, connect
workers to jobs and firms to suppliers, and teach skills that did not exist
before. Many of the projects in GAM’s plan fit that description: efficient
public transport widens the labour market, modern waste management and
smart-city systems create demand for local technical expertise, and better
roads lower costs for businesses. Cheaper financing helps only if the savings
are directed to projects like these. And when citizens hold the sukuk, they
have a reason to follow how the money is used, a quiet but powerful form of
governance that strengthens the discipline such projects need.
How
to bring retail savers in
Jordan already has the legal foundation in the Islamic Finance Sukuk Law
No. 30 of 2012, an established banking sector, and now a first municipal
issuance. A credible start rests on four choices. Keep entry low and simple,
with digital subscription through authorised institutions. Be clear about the
use of funds, and explain how the savings from cheaper financing will be used.
Build trust through independent Sharia oversight, regular reporting and plain
disclosure of risks. And make the secondary market work, because investors
value the option to sell before maturity.
The most practical step would be to reserve a modest retail portion of
one of GAM’s planned 2027 or 2028 tranches. The result could then be judged by
clear measures: how many new investors took part, how well they understood the
product, what it cost to distribute, and how active trading proved to be. Sukuk
are not risk-free, so returns should be compared honestly with alternatives
such as bank deposits, with liquidity and risk explained to every saver.
From
balance sheets to partnership
Retail sukuk will not solve every economic challenge, and they cannot
replace sound public finances or productive investment. Their contribution is
narrower and still valuable: they mobilise domestic savings, diversify funding
and give citizens a stake in the city they live in. Islamic sukuk should be
judged not only by the amount they raise, but by whether lower borrowing costs
turn into better services for the people of Amman.
Jordan’s economy has shown resilience, with real GDP growth of 3.0 per
cent in the second quarter of 2026. The task now is to turn that resilience
into capability. The Cabinet’s approval of GAM’s first sukuk has opened the
door for institutions. The next step is to let the public walk through it.
