Capital Market: Stakeholders Explore Opportunities In Nigeria’s Non-Interest Ecosystem

-by our correspondent.

Islamic Finance took center stage at a recent online forum hosted by Proshare WebTV. The maiden edition of the Webinar Series which focused on discussing Investment Opportunities in Nigeria’s Non-Interest Capital Market (NICM) was sponsored by Proshare and NASFAT.

Participants include;  Head of Department, Securities and Investment Services, SEC Nigeria, AbdulKadir Abbas,  as the Keynote Speaker and other key market players from the non-interest capital market sector; Head, External Relations, FMDQ Group, Adaze Uzor-Kalu;  CEO, Marble Capital Limited, Akeem Oyewale;  Team Lead, Shariah Non-Compliant Risk, TAJ Bank, Tesleem Akosile; Vice President, Financial Markets, AFEX Oluwafunto Olasemo; Head, Investment & Research, Lotus Capital Limited, Ndako Mijindadi,  and Dr. Mustapha Ishaq Akinlaso as the Moderator.

Speaking on the importance of the event, the WebTV Islamic Finance Weekly Programme Anchor, Bukola Akinyele-Yisau, explained that it is an avenue to enlighten corporate entities and investors about non-interest finance opportunities in Nigeria’s capital market, while addressing salient issues affecting the growth of the market. She further added that it was essential to enable stakeholders deliberate on avenues to synergize efforts to grow the industry.

In his keynote address, Abbas highlighted the commitment of the Securities and Exchange Commission (SEC) to the development of Nigeria’s non-interest Capital Market, adding that the growth of the non- NICM in the country has been aided by the increase in Sukuk bond issuances amidst a growing demand for the instrument by local investors.

On the Capital Market Master Plan (2015-2025) developed by the Securities and Exchange Commission, Nigeria he explained that the goal is to ensure that the NICM sub-sector represent 25% of the overall market capitalization by 2025, while Sukuks will represent 15% of total debt issuances outstanding by 2025. He noted that in 2004, SEC joined the IOSCO joint committee on the Islamic Capital Market in Nigeria which led to the development of several initiatives to deepen the market.

On his part, Akosile, who represented the Managing Director of TajBank, Norfadelizan Abdulrahman, said there are enormous opportunities for non-interest banks to collaborate with other stakeholders to build a vibrant Islamic finance ecosystem.

He identified areas like wealth management as a means to develop products for high-net-worth individuals (HNIs) and other classes of citizens in driving financial inclusion and economic empowerment.

For her part, Head of External Affairs, FMDQ Group Adaeze Uzor-Kalu,  in her presentation said Nigeria is one of the pioneering nations that has established an Islamic Finance Regulatory framework in the West African Region. From the debt market perspective, she said the total global Sukuk market had reached $715.2bn in Q1, 2021 which is 3% higher than in Q4, 2020. In terms of prospects for developing Islamic finance through the Debt Capital Market, she highlighted the following areas that the Nigerian debt capital market needs to learn from and explore:

  • A standardized and robust regulatory framework for Sukuk issuance
  • Government and regulatory incentives to drive participation in the Islamic Finance sector.
  • Heightened awareness on Islamic Finance and build capacity in key institutions.
  • Increased primary markets issuances of Sukuks and Islamic commercial papers, and
  • Enhancing liquidity through a two-way quote system.

“Islamic financing is critical to improving financial inclusion as it takes account of Shariah-complaint market players. Also, Islamic finance and ESG finance are complementary capital-raising and investment approaches as they both consider their impact on society, welfare of people and the environment.” She added.

In his presentation, Oyewale, outlined the various segments that non-interest finance products could be developed and adopted such as Sukuk (Islamic Bonds), Commodities, Islamic Unit Trusts, Islamic Derivatives, Equities, Mutual Funds, and Islamic Exchange Traded Funds. He also described the Lotus Index as an enabler for investors seeking Halal-compliant stocks in the capital market.

He enumerated the benefits of Islamic Capital Markets to include; offering Muslims, and other ethically conscious investors the opportunity to invest without comprising their convictions; promoting social justice and offering highly competitive returns for individuals, while serving as a good source of funds for asset growth for organisations and reducing economic disparity, enhancing ethics, equity and property rights, and aiding the achievement of the 2030 gender for sustainable development for governments.

The Vice President, Financial Markets, AFEX Nigeria, Oluwafunto Oluwasemo, identified trade finance, inventory/working capital finance, commodity trading, and production finance as aspects in the commodities market that Islamic Finance can support. She pointed to other investment opportunities for Islamic finance such as Sharia Asset-Backed Commodities Products (ABCP), Exchange Traded Commodities (ETC), Input finance, and Spot contracts.

In the area of investment through Islamic finance products and Index, the Head, Investment and Research, Lotus Capital, Ndako Mujindadi,  informed participants that the total market capitalisation of Shariah-compliant stocks stood at roughly N11.3trn adding that sectors like Real Estate and Healthcare could be funded by non-interest Islamic finance assets.

The panelists unanimously agreed that the non-interest finance (Islamic Finance) industry is poised for growth and should be well utilizes by entities including individuals, organisations and governments).

The Webinar which had attendees from other parts of the world including Poland, Malaysia and India featured a presentation by the 1st Vice President of NASFAT, Ayodeji Abdulrauf,  who elaborated on what NASFAT stands for and how it supports the Islamic finance market.

“NASFAT assists the market through access to Islamic Finance scholars who are knowledgeable about the industry and can facilitate the development of Shariah Compliant products. NASFAT has been involved in socially impactful projects through collaborations in activities focused on Health, Education Livelihood and Dawah (Islamic Evangelism).” He said.

He called on the Islamic Finance community to support the development of its University – Fountain University, which requires more infrastructure to enhance the learning environment for students.

Comment here