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As part of efforts to tackle the factors hampering the rapid development of the Non-Interest Capital Market (NICM) in Nigeria, the Securities and Exchange Commission (SEC) and the Islamic Financial Services Board (IFSB) are to organise forums on Non-Interest (Islamic) Capital Market.
IFSB is an international standard-setting body vested with the power to ensure the soundness and stability of the global Islamic financial services industry.
This was disclosed by SEC in a statement at the weekend.
The Commission noted that the objective of the forum will involve several discussions on how to tackle the inadequate capacity within the industry, lack of awareness and education, the paucity of human capital and expertise, the limited availability of sharia-compliant products including short-term Shariah-compliant liquidity instruments, the harmonisation of regulatory and supervisory standards, and the integration of NICM with the conventional financial system.
SEC stated that NICM in Nigeria has evolved and is progressively becoming an important segment of the nation’s financial market.
The Commission said NICM provides a veritable avenue for mobilising medium to long-term investment in an ethical and Shariah-compliant manner through a wide range of products/services offered such as Sukuk (Islamic bonds), Islamic Mutual Funds, Islamic REITs, Islamic Crowd funding and Islamic Fintech among others, that cater for the needs and preferences of both ethical and conventional investors.
The NICM sector, SEC said has witnessed remarkable growth in recent years, reaching a global size of $3.25 trillion in 2022, adding that the main drivers of this growth include the increasing demand for ethical and socially responsible finance, diversification of funding sources and risk management tools, development of enabling regulatory and legal frameworks, and the innovation and standardisation of NICM products and practices.
“Nigeria, as the most populous country in Africa and home to the largest Muslim population in the continent, has a huge potential to develop its NICM sector and benefit from its opportunities. Nigeria has taken several steps to promote NICM; from the registration of the first Islamic Fund in 2008 to the issuance of the first Sub-National Sukuk in 2013 and the subsequent issuance of the country’s first Sovereign Sukuk in 2017. To date, the country has witnessed further sovereign and corporate Sukuk issuances as well as the registration of more ethical and Shariah-compliant funds,” SEC said.
The Secretary-General of IFSB, Dr. Bello Danbatta, commended the Commission and the Government for their efforts.
According to him, “We applaud the steadfast dedication to cultivating a resilient non-interest capital market in Nigeria. The comprehensive initiatives including the upcoming high-level international forum with the IFSB and market players underscore the distinct commitment to fostering industry collaborations, facilitating insightful discussions, and promoting knowledge sharing. We look forward to initiating this continuous, collective effort propelling market development, promising not just economic strength but also ensuring enduring and inclusive prosperity for the people,”
However, many challenges are hampering the faster development of the Nigerian NICM sector as SEC has been implementing several initiatives to further deepen the NICM in line with the 10-year Capital Market Masterplan (2015–2025) and the Revised CMMP (2021–2025).
Recall that the Commission had developed regulations for Sukuk issuance and Islamic fund management and as a result, three corporate Sukuk and two sub-national Sukuk have been approved.
In addition, 11 Shariah-compliant funds are operating, with AuM of over N95 billion.
The Forum will also feature two side events; the IFSB’s 5th Innovation Forum held for the first time in the region and an IFSB Member and Industry Engagement Session.
According to SEC , the high-level Forum which will be held on 6th and 7th December, 2023 at the Abuja Continental Hotel is expected to strengthen cooperation and knowledge-sharing among market players and policymakers around the world, especially in the African region.
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