Industry collaboration, innovation fuel growth in Nigeria’s Sharia-compliant pension investments

Joy Agwunobi

As Nigeria’s pension industry embraces the increasing demand for non-interest financial products, stakeholders are prioritising collaboration and innovation to expand Sharia-compliant investment opportunities. In a recent webinar organised by the Pension Fund Operators Association of Nigeria (PenOp) in collaboration with the National Pension Commission (PenCom), industry experts, financial institutions, and regulators came together to explore how joint efforts could strengthen the growth of ethical investments under the Retirement Savings Account (RSA) Fund VI.

The event, titled “Maximising the Potential of RSA Fund VI: Exploring Sharia-Compliant Investments,” brought together key players in the sector to address challenges and chart a course for innovation.

During his opening remarks,Oguche Agudah, chief executive officer of PenOp, emphasised the importance of collaboration within the pension industry to expand the available investment outlets for Fund VI. He highlighted that leveraging partnerships and innovative solutions is crucial in overcoming existing challenges and driving growth in Sharia-compliant investments.

Industry participants shared a common view on the need for collaboration, Adam Muhammad Abubakar, chairman of the Pension Industry Non-Interest Advisory Committee (PINAC), highlighted the importance of joint efforts in navigating the hurdles pension fund administrators (PFAs) face in accessing non-interest financial instruments.

Abubakar pointed out that expanding the range of Sharia-compliant investment options requires active participation from all stakeholders, including financial institutions and regulators.

Representing PenCom, Bil-Yaminu Yakubu acknowledged these challenges and stated that the commission remains committed to advancing the ethical investment space. He assured participants that PenCom is working to provide clear and concise rules to instil confidence in PFAs seeking to diversify their portfolios with Sharia-compliant instruments.

Yakubu emphasised that regulatory clarity and collaboration with stakeholders are essential to drive innovation in this growing segment.
The webinar also highlighted how innovative instruments like Sukuk bonds have played a significant role in raising funds for infrastructure projects, serving as a crucial link between ethical investments and national development. Participants stressed the need to scale up the size of Sukuk issuances to attract more PFA participation.

They noted that joint efforts between issuers, PFAs, and regulators are critical to expanding the market for these financial products and providing more investment options under RSA Fund VI.

Financial institutions are also driving this collaborative momentum, Abimbola Yusuf, Treasurer of Alternative Bank, highlighted their ongoing transition into a standalone non-interest bank, which aims to introduce tailored financial products to the market. Yusuf shared that their goal is to deliver innovative services that meet liquidity needs while adhering to Islamic finance principles, thereby supporting PFAs in their ethical investment journey.

Adding to this, Akeem Oyewale, CEO of Marble Capital, emphasised the importance of industry collaboration in scaling Sharia-compliant investments. According to Oyewale, working closely with issuers is key to developing a robust pipeline of financial instruments, thereby creating more diversified investment opportunities for pension fund administrators. He reiterated that growing the size and scope of Sharia-compliant issuances requires sustained innovation and strong partnerships across the industry.

In respect to this collaborative drive, the newly elected compliance executives of the pension industry have taken office at a crucial time, as the sector faces increasing scrutiny and a heightened demand for improved operational standards. Oguche Agudah, the CEO of PenOp congratulated the new executives which include Edidiong Akan, Temitope Anjorin, and Tunde Folayan and highlighted the vital responsibilities they now undertake.

Under the leadership of the new Director-General (DG), these roles are expected to play a pivotal part in addressing the industry’s pressing challenges, including combating fraud, enhancing efficiency, and delivering better outcomes for pensioners.

The new compliance executives pledged to perform their duties with professionalism and a commitment to the highest ethical standards while fostering collaboration among pension operators. They emphasised that their roles are not just critical for daily regulatory compliance but also vital for steering the industry toward a future where best practices are upheld, inefficiencies are reduced, and ethical standards are maintained.
Plans were also announced to formalise the Compliance Forum, envisioning it as a robust and influential platform within the industry; and it is expected to facilitate dialogue among stakeholders, address regulatory gaps, and promote best practices through industry-wide collaboration.