Capital Market Development: Non-Interest Finance Holds Great Potential – SEC DG

The Director General of the Securities and Exchange Commission, Lamido Yuguda says the Non-Interest finance segment holds great potentials in furthering the of the capital market and the growth of the Nigeria’s economy.

The SEC DG who was speaking at a one-day virtual conference with the theme “The Imperative of Non-Interest Capital Market for Pension Industry”, said the product has been judged as one of the most appropriate for the funding of long-term infrastructure.

Yuguda said the pension industry is one of the fastest growing sectors in the nation’s economy with assets under management of N13trn as at the end of September 2021 adding that of this impressive amount, less than N80bn is invested in Sukuk bonds representing a little less than 1% of total pension assets under management.

In his words: “This calls for more innovative financial products to deepen our market and sustain the growth in the industry especially in the non-interest segment. We strongly believe that the capital market has a leading role to play in this regard by providing a variety of long-term investable products to service the needs of the pension industry as well as other investors with similar focus.

“It is encouraging that the national pension commission has taken concrete steps to improve the regulatory framework for the investment of pension funds in the non-interest capital market by the introduction of operational framework for the non-interest fund.

“This will no doubt provide an additional opportunity for retirement savings account holders and retirees to invest their savings in financial instruments that are aligned with their lite goals and objectives. Indeed, the operationalization of the funds definitely accelerates the national financial inclusion agenda while increasing the quantum of investible funds by unlocking the untapped capital.”

According to the SEC boss,  as at September 2021, the total assets stood at N7.79bn constituting about 0.059% of total pension assets under management adding that the fund assets will grow with robust public awareness, education programs and capacity building of stakeholders through seminars, workshops and programs.

“The SEC in realization of the potential of the non-interest segment of the capital market, has a veritable avenue for providing long-term capital launched its 10-year capital market master plan with a very strong focus on the development of the non-interest capital market segment through awareness creation, capacity building, review of regulatory framework and development of non-interest projects and services.”

In a goodwill message, Director General of the National Pensions Commission (PenCom), Aisha Dabir Umar, commended SEC for organizing the virtual seminar on the Imperative of non-interest capital market products for the pension industry. Represented by Commissioner Administration, PenCom, Dr. Umar Farouk Aminu, the PenCom Boss acknowledged with appreciation, the collaborative efforts of PenCom and SEC which have over the years laid acceptable values and good governance standards in their investments of pension funds in the Nigerian capital market.

“As you may be aware, PenCom, recently released a list of operational guidelines for non-interest funds. It is our belief that this singular act will promote financial inclusion in Nigeria, and particularly drive enrollment in the macro pension fund. It is my call that industry practitioners gathered here will come up with practical measures to facilitate the issuance of non-interest instruments in the market”. She said.

In his remarks, Secretary General of the Islamic Financial Services Board, Dr. Bello Danbatta, said Islamic finance is a complementary system adding that no system would be able to develop without integrating it in its financial system. “Sustainable finance is not complete without integrative finance and integrative finance is only possible when you have non-interest and interest based finance,” he noted.

Comment here