Islamic Capital Market: SEC targets 25% of market capitalization by 2025

The Securities and Exchange Commission (SEC) said it was working with stakeholders to grow the non-interest segment of the capital market, which is expected to account for at least 25% of total market capitalization by 2025, with Sukuk accounting for 15% of existing bond issuances.
Mr. Lamido Yuguda, the SEC’s Director General, announced this yesterday in Abuja at the 2021 African International Conference on Islamic Finance, which had the topic “Infrastructure Financing, Sustainability, and the Future of African Markets 2.0.”

Mr. Yuguda stated that the SEC would continue to encourage businesses to use the Islamic Capital Market by providing and assuring a favorable enabling environment.
According to Yuguda, who was represented by SEC Executive Commissioner Corporate Services, Mr. Ibrahim Boyi, Islamic finance instruments are worldwide recognized as acceptable securities with lower Value-at-Risk due to their asset-based and project-tied investing qualities.

“Thus, it offers financial products that are safe, competitive and attractive. Many jurisdictions have realized the potentials in Islamic Finance and have positioned themselves to tap the potential benefit of such financing”, he added.

According to him, “It is noteworthy that since Islamic finance heavily relies on the Islamic Capital Market as an investable outlet, products such as Sukuk (Islamic Bond), Islamic REITs (I-REITS), Islamic Funds (I-Funds) and Exchange-mirrored Traded Funds (Islamic Equity Index) could all be offered for the purpose of financing infrastructure.

“Sukuk issuances are increasingly gaining significance as a veritable mode of infrastructure financing. Consequently, a number of countries in the Sub-Saharan region of the continent – Sudan, Gambia, Senegal, South Africa, Ivory Coast, Nigeria, Mali, and Togo- have issued sovereign Sukuks to finance infrastructure”.

According to him, the Nigerian Securities and Exchange Commission (SEC) has enacted a series of reforms targeted at deepening the non-interest capital market.