NGX Partners ISDBI to Deepen Islamic Finance in Nigeria

By Kayode Tokede

In a bid to further deepen the capital market in Nigeria through the issuance of Islamic Finance instruments, Nigerian Exchange Limited (NGX) and Islamic Development Bank Institute (IsDBI) collaborated on a capacity-building workshop for Issuers and Investors.

The workshop, held in Lagos yesterday aimed to educate stakeholders on contemporary issues and practices of Islamic finance in different jurisdictions and furnish them with case studies and success stories.

Themed “Economic Growth and Business Development Opportunities Through the Islamic Capital Markets,” participants were able to gain more understanding of how Islamic finance can drive inclusive growth and sustainable business practices in Nigeria.

The Executive Director, Capital Markets, NGX, Mr Jude Chiemeka whilst delivering the opening remarks underpinned the potential of Islamic Finance in Nigeria.

“According to Fitch Ratings, the size of the Nigerian Islamic finance industry is estimated at $2.9 billion at end-2022, with outstanding sukuk being the largest segment at 57per cent, followed by Islamic banks at 42 per cent (total assets), and the remaining one per cent between Islamic funds (total assets) and takaful (total contributions),” he said.

Chiemeka added, “With Nigeria having a significant Muslim population of about 53 per cent  of the country’s over 200 million population, the long-term potential of Islamic finance in Nigeria is indeed significant.

“It has increased access to banking services for underserved Muslim populations, promoted access to finance for small- and medium-sized enterprises (SMEs) through its risk-sharing characteristics, and provided suitable financing options for infrastructure projects through Sukuk, which can spur economic development and attract private sector investment.”

Delivering a presentation on applying Islamic Finance to Nigeria’s economy, Senior Islamic Finance Specialist, IsDBI, Mr Syed Faiq Najeeb said Islamic finance in Nigeria can take the form of partnership and solidarity-based models.

He noted that since Islamic finance is focused on real economic-activity based financing and investment like infrastructure and real estate financing with strong principles of governance, ethics and fairness, it portends great opportunity for value creation as players may have fewer competitors. 

According to Najeeb, Its risk-sharing, profit-sharing, loss-absorbing mechanisms and absence of zero-sum games can help drive sustainable economic growth.

The Head, Secondary Markets, NGX, Mr Kazeem Alimi expressed confidence on the learning by participants saying that, “We are optimistic that it will lead to more product issuances in the Islamic finance space especially from corporates.”