Experts X-Ray Nigeria’s Non-Interest Capital Market Ecosystem Prospects

Experts, last week rose from the maiden edition of the Islamic Finance Webinar Series where they discussed Investment Opportunities in Nigeria’s Non-Interest Capital Market (NICM).

Sponsored by Proshare and NASFAT, the virtual event hosted by WebTV (a digitalTV powered by Proshare), had AbdulKadir Abbas, Head of Department, Securities and Investment Services, SEC Nigeria as keynote speaker; was attended by dignitaries and market players from the non-interest capital market ecosystem.

Abbas in his keynote assured that the SEC is committed to the growth and development of Nigeria’s non-interest Capital Market, the growth of which has been fueled in the country by the increase in Sukuk bond issuances amidst a growing appetite for the instrument by local investors.

He noted that the Capital Market Master Plan (2015-2025) developed by the commission set a goal of ensuring 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 same year.

He recalled 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.

Abbas stressed that the commission will continue to promote enabling regulations to make Nigeria the regional hub for non-interest finance in Africa through collaboration with market stakeholders to introduce regulations that provide level playing field for all participants.

This, he said, will be achieved by fostering partnerships for enhanced capacity to build an innovative and efficient NICM, embracing digitalization to support innovative products and developing a dynamic fair, transparent and an efficient market where investors and businesses in Africa could invest and raise sharia-compliant capital.

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

He listed them to include wealth management as a means to develop products for high-net-worth individuals (HNIs) and other classes of citizens, thereby driving financial inclusion and economic empowerment.

Mrs. Adaeze Uzor-Kalu, Head, External Affairs, FMDQ Group in a presentation said Nigeria was one of the pioneering nations in 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 was 3% higher than in Q4, 2020, with prospects for developing Islamic finance through the Debt Capital Market, in areas that the Nigerian debt capital market needs to learn from and explore. She listed them as the need for 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; as well as enhancing liquidity through a two-way quote system.

Islamic financing, she stressed, is critical to improving financial inclusion as it takes account of Shariah-complaint market players, adding that 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.

Akeem Oyewale, in his presentation, outlined the various segments that non-interest finance products could be developed and adopted like Sukuk (Islamic Bonds), Commodities, Islamic Unit Trusts, Islamic Derivatives, Equities, Mutual Funds, and Islamic Exchange Traded Funds.

Oyewale also described the Lotus Index as an enabler for investors seeking Halal-compliant stocks in the capital market, while stresssing the various benefits of Islamic Capital Markets like offering Muslims, and other ethically conscious investors opportunity to invest without compromising their convictions. Others are 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.

On her part, Vice President, Financial Markets, AFEX Nigeria, Mrs. 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 listed 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, Ndako Mujindadi, Head, Investment and Research, Lotus Capital estimated the total market capitalisation of Shariah-compliant stocks on the Nigerian Exchange at roughly N11.3tr. On benefits derivable from Islamic finance instruments, he identified sectors like Real Estate and Healthcare could be funded by non-interest Islamic finance assets.

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

Other highlights of the webinar were the participation and deliberations around the polls shared on Islamic finance literacy, ownership of non-interest bank accounts, and the understanding of the benefits of investing in non-interest finance products; the question and answer session and a giveaway of access to Non-Interest Investment Products managed by Lotus Capital and Marble Capital to two participants (one from India and another from Nigeria).

 like Mrs. Adaeze Uzor-Kalu, Head, External Relations, FMDQ Group.

Other participants included Akeem Oyewale, chief executive of Marble Capital Limited; Tesleem Akosile, Team Lead, Shariah Non-Compliant Risk, TAJ Bank; Mrs. Oluwafunto Olasemo, Vice President, Financial Markets, AFEX; Ndako Mijindadi, Head, Investment & Research, Lotus Capital Limited; while Dr. Mustapha Ishaq Akinlaso was moderator.

Speaking earlier on importance of the event, Mrs Bukola Akinyele-Yisau, the WebTV Islamic Finance Weekly Programme Anchor, said the webinar was 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.

The Webinar which had attendees from other parts of the world including Poland, Malaysia and India featured a presentation on what NASFAT stands for and how it supports the Islamic finance market through access to Islamic Finance scholars who can facilitate the development of Shariah compliant products, by Alh Ayodeji Abdulrauf, first Vice President of NASFAT.

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