Islamic finance, the Director-General of the Securities and Exchange Commission (SEC), Lamido Yuguda, recently shared insightful information about the burgeoning Islamic finance sector in Nigeria. As of the close of 2022, the Islamic finance segment within the country’s financial industry has reached an impressive estimated value of $2.9 billion. A noteworthy component of this figure is the prominence of outstanding Sukuk, constituting a significant 57% of the total amount.
Further analysis of the sector’s composition reveals that Islamic banks hold a substantial 42%, underlining their integral role in this financial landscape. The remaining 1% is distributed between Islamic funds and takaful, highlighting the diverse components that collectively contribute to the Islamic finance tapestry in Nigeria.
These revelations were brought to light by Director-General Yuguda during a welcome address at a forum centered on the non-interest capital market, held in Abuja. He underscored the fact that the Nigerian market represents merely 0.9% of the global non-interest market. This statistic points towards a compelling narrative, indicating a critical need for sustained growth and development within the Islamic finance sector in Nigeria.
Director-General Yuguda emphasized the immense potential for growth, especially in light of Nigeria’s substantial population and a considerable proportion of the population remaining unbanked. The long-term prospects for Islamic finance in Nigeria appear promising, with ample room for expansion and integration into the broader financial landscape.
“The non-interest (Islamic) capital market (NICM) in Nigeria has undergone transformative growth, becoming an integral part of our financial framework. It offers a distinctive platform for ethical and shari’ah-compliant investments,” stated Yuguda. He went on to emphasize the contribution of NICM to the diversity of the country’s financial markets, aligning seamlessly with the revised capital market Master plan of 2021–2025.
Director-General Yuguda also provided insights into the impact of Sukuk in Nigeria since its debut in 2017. The Debt Management Office (DMO) has successfully raised almost N1 trillion through Sukuk, contributing significantly to the financing of over 5,000 kilometers of critical roads and bridges.
In light of these developments, Yuguda assured stakeholders that the non-interest capital market has a pivotal role to play in the ongoing economic program spearheaded by the administration of President Bola Ahmed Tinubu. He called for the collective embrace of this financial framework by all stakeholders to leverage its potential for broader economic benefits.
As the forum unfolded, the Minister of Finance and Co-ordinating Minister of the Economy, Wale Edun, officially declared it open. In his address, Minister Edun urged stakeholders to actively engage in proposing practical solutions. These solutions, he emphasized, would assist the government in achieving financial sustainability and, in turn, contribute to the overall repositioning of the Nigerian economy.
Conclusion: Islamic Finance
The evolving landscape of Islamic finance in Nigeria, as detailed by Director-General Yuguda, paints a picture of growth, potential, and transformative impact. The collaborative efforts of stakeholders, as advocated by Minister Edun, are crucial in harnessing this potential for the sustainable development and enhancement of Nigeria’s economic standing.
Source: The guardian
