SEC seeks 25% capital market share for Islamic products

The Securities and Exchange Commission (SEC) says it targets to boost non-interest capital market in such a way that the segment takes up at least 25 percent of  Nigeria’s overall market capitalisation.

Mounir Gwarzo, director-general, SEC said to realise this, the commission is considering modalities for setting up a Sharia Advisory Council, as a body of experts to advise on non-interest product applications.

“To boost liquidity of non-interest products, we are working with a committee to support the FMDQ platform enable secondary market trading of the products. We are also engaging the Central Bank of Nigeria (CBN) to obtain liquidity status for non-interest products (especially the sukuk),” he said on Tuesday when Nigerian financial system regulators held a roundtable with Alderman Alan Yarrow, Lord Mayor of the City of London.

He said SEC, through these initiatives intends to build a strong regulatory regime for non-interest products, encourage stakeholders in the non-interest capital market and ensure the emergence of Nigeria as a prominent non-interest capital market hub, both at the regional level and globally because of its immense developmental opportunity for the country.

He noted that over the years, SEC has taken a leading role in deepening the non-interest finance space in Nigeria, by developing a very robust rules on Sukuk issuance which have already enabled the Osun State government to issue Nigeria’s first ever Ijarah Sukuk which was oversubscribed.

He further noted that the SEC has also set up rules on Islamic Fund management and currently planning regional roundtable events, starting with Kano, and targeting potential non-interest capital market product issuers such as State governments.

Gwarzo , however, cited the Malaysia experience which brought about a remarkable transformation, pushing the country with a population of just 30 million to an important global Islamic finance market because of its large Muslim population.

He however wondered why Nigeria, which has more than 80 million muslims and the largest economy in Africa still lagged behind in non-interest investments.

The DG was of the view that to harness this potential, proper planning is imperative, explaining why SEC has set up an industry-wide Committee of experts last year to produce a 10-year master plan on non-interest capital market product which is also helping in meeting set targets.

In his speech, the Lord Mayor said “London has the expertise, the variety and the capacity to help”’ looking at Nigeria’s legal framework, to helping up skill the young, dynamic and ambitious population.

He noted that the Governor of the Bank of England has made regulatory and fiscal changes that make it easier to establish Islamic banks, offer Shariah-compliant products and in general enable British Muslims to engage with the financial system in a way consistent with their faith.

The UK is the leading centre for Islamic finance outside the Muslim world and it is their tradition to stand alongside Dubai and Kuala Lumpur as the main global hubs for Islamic finance.

The UK government, the Lord Mayor said has supported that effort, and thinks that Nigeria with about 88 million Muslims and 39% of the adult population unbanked could do same.

Onyinye Nwachukwu