• Wednesday, June 19, 2024
businessday logo

BusinessDay

Latest report rate Nigeria low in global Islamic economy

islamic economic banking

A report released on the Global Islamic Economy indicates that Nigeria, Africa’s most populous Muslim nation is yet to tap into the huge business and development opportunities which Islamic mode of economy offers.

The current low participation of Nigeria in Islamic economy is coming against the backdrop of increasing momentum being recorded in the sector across the world.

Experts are of the view that the Federal Government could leverage on the tremendous opportunities which the economy offers in its quest to diversify the nation’s economy.

The latest report which was commissioned by a group “Dubai The Capital of Islamic Economy”, and executed by “Thomson Reuter” in collaboration with “Dinar Standard”, a strategic research firm, revealed that the growth of Global Islamic economy is fueled by increase in Islamic value-driven consumer lifestyle, and business practice.

According to the report, the core sectors driving the growth of the economy are: financial services and food, as well as lifestyle sectors of travel, modest fashion, pharmaceuticals, cosmetic, media and recreation.

“The Islamic economy collectively is creating value for consumers and the economies involved. It also has major potential to contribute to the global well-being through its underlying socially-conscious ethos.

“ In aggregate, the global expenditure of Muslim consumers on food and lifestyle sectors grew 9.5% from the previous years’ estimates to $2 trillion in 2013 and is expected to reach$3.7 trillion by 2019 at a compound annual growth rate of 10.8%. This forms the potential core market for Halal Food and lifestyle sectors.

“In addition, Islamic financial assets are estimated to be $1.66 trillion in 2013.

Islamic funds and Sukuks led growth with 14% and 11% growth year-on-year, whereas banking experienced a 5% drop in its assets. This Report estimates the potential universe of Islamic Finance assets in its core market (assuming the optimal scenario) to be $4.2 trillion in 2014” the report stated.

The top country for the Global Islamic Economy indicator ranked as follows: Malaysia, United Arab Emirate, Bahrain, Oman, Saudi Arabia, Qatar, Kuwait, Jordan, Pakistan, and Indonesia.

Consumers of the Islamic economy are primarily Muslims but also include others outside the Islamic faith who shares similar values. The specific Islamic value-influenced consumer practices include the consumption of Halal (lawful) food, Islamic financing, modest fashion, family-friendly travel, as well as other services with special considerations on gender interactions and religious practices.

Despite the nation huge Muslim population, the only known attempt by the Federal Government to embrace the opportunities in the sector was announced recently by The Securities and Exchange Commission (SEC).

The body disclosed that it is partnering the Debt Management Office (DMO) to float Nigeria `s first sovereign Sukuk, as part of the on-going initiative to tap into the huge funding opportunities in the non-interest capital market.

SEC disclosed that significant progress has been achieved in the floating of the Sukuk instrument, and it is expected that the instrument will come on stream in the year (2016).

Mounir Gwarzo, director –general of the commission, made this disclosure on Monday, while delivering an address at a One-Day Roundtable on Non-Interest Capital Market, which open on Monday in the ancient city of Sokoto.

“I urge all of us to actively participate in the discussion and propose practical ways to help companies and state governments that are interested in leveraging the Sukuk market to raise funds for various infrastructure projects.

“We are working closely with the Debt Management Office (DMO) to ensure that Nigeria issues her first sovereign Sukuk that will provide the needed benchmark for other categories of issuers.

“We are hopeful there will be a significant progress on this front before the end of 2016” Gwarzo explained.