SEC, IFSB hosts maiden global forum on non-interest capital markets

In a bid to tackle the challenges hampering faster development of the Non-lnterest Capital Market (NICM) in Nigeria, the Securities and Exchange Commission (SEC) and the Islamic Financial Services Board (IFSB), an international standard-setting body with a vested interest in ensuring the soundness and stability of the global Islamic financial services industry, is set to convene an SEC Nigeria-IFSB International Forums on Non-Interest (Islamic) Capital Market.

The SEC in a statement over the weekend, noted that the objective of the Forum will involve several discussions on how to tackle the inadequate capacity within the industry, lack of awareness and education, the paucity of human capital and expertise, the limited availability of sharia-compliant products including short-term Shariah-compliant liquidity instruments, the harmonization of regulatory and supervisory standards, and the integration of NICM with the conventional financial system.

Whilst stating that the Non-Interest Capital Market (NICM) in Nigeria has evolved and is progressively becoming an important segment of the nation’s financial market, SEC said NICM provides a veritable avenue for mobilizing medium to long-term investment in an ethical and Shariah-compliant manner through a wide range of products/services offered such as Sukuk (Islamic bonds), Islamic Mutual Funds, Islamic REITs, Islamic Crowdfunding and Islamic Fintech, etc. that cater for the needs and preferences of both ethical and conventional investors.

SEC said that the NICM sector has witnessed remarkable growth in recent years, reaching a global size of $3.25 trillion in 2022, adding that the main drivers of this growth include the increasing demand for ethical and socially responsible finance, diversification of funding sources and risk management tools, development of enabling regulatory and legal frameworks, and the innovation and standardization of NICM products and practices.

Ngeria, as the most populous country in Africa and home to the largest Muslim population in the continent, has a huge potential to develop its NICM sector and benefit from its opportunities.

The country has taken several steps to promote NICM; from the registration of the first Islamic Fund in 2008 to the issuance of the first Sub-National Sukuk in 2013 and the subsequent issuance of the country’s first Sovereign Sukuk in 2017.

To date, the country has witnessed further sovereign and corporate Sukuk issuances as well as the registration of more ethical and Shariah-compliant funds.

Bello Lawal Danbatta, secretary-general of IFSB, praised the Commission and the federal government, “We applaud the steadfast dedication to cultivating a resilient non-interest capital market in Nigeria. The comprehensive initiatives including the upcoming high-level international forum with the IFSB and market players underscore the distinct commitment to fostering industry collaborations, facilitating insightful discussions, and promoting knowledge sharing”.

Dambatta said IFSB Iook forward to initiating this continuous, collective effort propelling market development, promising not just economic strength but also ensuring an enduring and inclusive prosperity for the people, adding that many challenges are hampering the faster development of the Nigerian NICM sector.

SEC has been implementing several initiatives to further deepen the NICM in line with the 10-year Capital Market Masterplan (2015–2025) and the Revised CMMP (2021–2025). The Commission had developed regulations for Sukuk issuance and Islamic fund management.

As a result, three corporate Sukuk and two sub-national Sukuk have been approved. In addition, 11 Shariah-compliant funds are operating, with AuM of over N95 billion”.

The Forum will also feature two side events; the IFSB’s 5th Innovation Forum – held for the first time in the region and an IFSB Member and Industry Engagement Session.

The high-level Forum which will be held on 6th and 7th December, 2023 at the Abuja Continental Hotel   is expected to strengthen cooperation and knowledge-sharing among market players and policymakers around the world, especially in the African region, the SEC said.