Caption: From left, Commissioner, Securities and Exchange Commission (SEC) Pakistan, Mujtaba Ahmad Lodhi; Chairman, SEC Pakistan, Akif Saeed; Director General, SEC Nigeria, Dr. Emomotimi Agama; and Chairman, Accounting and Auditing Organisation for Islamic Financial Institutions, Sheikh Ibrahim Bin Khalifa Al Khalifa; during the second International Islamic Capital Market Conference and Expo 2024 in Karachi, Pakistan.
The Securities and Exchange Commission (SEC Nigeria), on Thursday said the Federal Government of Nigeria raised a total of N1.1tr (US$657.6m) through the issuance of six Sovereign Sukuk bonds to finance 124 Federal road projects covering over 5,820 kilometers across the six geopolitical zones of the country.
Director General of the SEC, Dr. Emomotimi Agama stated this during the ongoing second International Islamic Capital Market Conference in Karachi, Pakistan, Thursday.
The success rate of these instruments, he noted, stands the Islamic Capital Market (ICM) out as a resilient and innovative tool for mobilizing resources, describing the issuance of sovereign Sukuk since 2017 as a key pillar responsible for growth of the ICM in Nigeria.
According to him, these issuances have consistently been oversubscribed, with subscription rates reaching as high as 441%, even as he disclosed that Sub-national and corporate Sukuk issuances are also growing in Nigeria.
Notable examples, he continued, include Osun and Lagos states, Family Homes Limited, and TAJ Bank Plc, along with private Sukuk issuances by three other sub-nationals.
These, he stressed, have been instrumental in funding school infrastructure, housing and a first of its kind in Nigeria, tier 1 capital for a bank and underscores the versatility of Sukuk as a financing tool.
“Beyond Sukuk, the ICM segment in Nigeria offers diverse investment opportunities. From one registered fund in 2008, the segment currently boasts of 14 registered Halal mutual funds with a net asset value exceeding ₦105bn as of November 2024.
“The NGX Lotus Islamic Index tracks 11 Shariah-compliant equities, while Nigeria’s first Islamic Real Estate Investment Trust – ChapelHill N-REIT – highlights the potential of real estate investments.
“The prospects for Nigeria’s Islamic finance industry are underpinned by key growth drivers, both global and domestic. Globally, demographic trends, economic diversification efforts in oil-dependent economies, and regulatory support have spurred demand for Shariah-compliant products,” he hinted.
Continuing, Agama said “Nigeria’s large Muslim population, government-backed Sukuk initiatives, and growing investor awareness are driving market expansion.”
Emerging innovations in fintech, he believes, “also present further opportunities for market development.
“In that regard, the SEC registered the first Robo advisory firm in the Nigerian Capital Market in 2022. This Robo Advisor is focused on Shari’ah-compliant investments,” he said.
Agama further said the success of the ICM in Nigeria is deeply rooted in its strategic focus on infrastructure financing, financial inclusion, and sustainability as the SEC’s engagement with the ICM dates back to 2004, when the SEC joined the Islamic Finance Task Force of the International Organization of Securities Commissions (IOSCO).
The SEC boss recalled that this commitment was followed by the issuance of Islamic fund and Sukuk Rules in 2010 and 2013, respectively and later solidified in the Non-Interest Capital Market Master Plan (2015–2025), which outlines a 10-year roadmap for expanding the market’s depth and diversity.
According to him, “adopted in 2015 as part of the broader Nigerian Capital Market Master Plan (2015–2025), the Non-Interest Capital Market Master Plan (NICMMP) has been central to the development of the ICM segment in Nigeria. The document sets out a vision for the Islamic Capital Market – otherwise known as the Non-Interest Capital Market (NICM) in Nigeria – to contribute 25% of total market capitalization by 2025, with Sukuk accounting for 15%.
“The masterplan was further reviewed in 2021, to provide a renewed focus on deepening the ICM, through targeting 50 listings of sharia-compliant products with market capitalization of at least N5tr ($11bn) by 2025.
“The performance of the NICM Masterplan has been remarkable. Of the 15 initiatives outlined in the roadmap, nine had been fully implemented as of 2022, representing a 70% success rate. Key achievements include improved public awareness, increased retail participation in Sukuk, and the introduction of the Non-Interest Pension Fund (Fund VI) through collaboration with the National Pension Commission (PenCom). Another key achievement was the release of guidelines for taxation of Non-Interest transactions, in collaboration with the FIRS. This solved the challenge of double taxation hindering such transactions”.
The SEC DG however said the growth of the ICM segment within a decade and half, has come with some challenges including limited public awareness of Islamic finance principles, paucity of tradable instruments, and regulatory alignment across institutions.
Capacity-building, particularly in Shariah governance and compliance, he believes, remain critical, which is why the SEC is currently implementing strategies to address them with relevant stakeholders particularly in the public and private sector, providing targeted and effective solutions.
“Of particular interest is our ongoing effort to engage relevant stakeholders in the mortgage sector to develop Shariah-compliant housing finance solutions. This will create the needed impetus for developing Shariah-compliant Asset backed instruments to deepen our capital Market further”.
As the world looks into the future, Agama stated that the opportunities are endless as Islamic Finance is solving some practical challenges and needs of the Nigerian economy such as critical infrastructure deficit, financial exclusion, low mortgage penetration and disinterest in commercial financing opportunities due to faith-based and/or ethical concerns.
He said the increased level of activity in the Nigerian Market and established benchmarks for corporates and sub nationals, portend huge benefits for ethical investors and foreign capital seeking viable and sustainable investment outlets.
“As regulators and policy makers continue to refine and expand the regulatory space, product developers are continuing to innovate and offer variety of instruments seeking off-takers.
“This is the time to stake positions that will no doubt produce competitive returns and satisfy ethical and sustainability concerns. The table is set for investing. Foreign participants should take positions and increase stakes in tandem with domestic trends. This offers a significant opportunity to contribute to sustainable economic growth and financial inclusion in Nigeria and by extension the African continent” he added.
