The Nigerian Exchange (NGX) and stakeholders in the Islamic finance industry have stressed the crucial role of ethical investments for economic recovery and development.
They made the assertion at the third edition of Islamic Finance News Nigeria roadshow organised by the NGX in Lagos.
The show with the theme: Systemic Restart: Islamic Finance in Nigeria,” was targeted at facilitating the growth of a new asset class in the industry.
The event, held virtually, in collaboration with REDMoney Group, was aimed at promoting the growth and development of “Islamic Finance Industry’’ within the Nigerian economy.
Mr Temi Popoola, the Chief Executive Officer of NGX, said there was a need to find ways to explore the role Islamic financing could play in the current challenging economic climate.
Poppola said the Islamic Finance Developement Report 2020 forecast that global Islamic finance assets would reach 3.69 trillion dollars by 2024.
“The report attributed the strong growth in 2019 to the large issuance of Sukuk in the traditional Islamic finance market of Saudi-Arabia, Malaysia, Iran and others.
“In Nigeria, the Islamic financial market continues to grow with increased interest from market participants and a growing number of players including two Islamic banks.
“Following the devastating effects of the COVID-19 in the global economies, the Islamic finance industry has played a critical role in the global economic recovery.
“In 2020, the Islamic Development Bank raised $1.5 billion with its first Sukuk of sustainability designed to help in the recovery of COVID-19 in its member countries.
“In Nigeria, Islamic finance presents an opportunity for both corporates and the government to raise capital for economic growth.
“I believe the discussions today will reveal steps to further mobilise ethical capital to solve Nigeria’s economic challenges,” Popoola said.
He added that the Islamic finance industries assets grew by 14 per cent in 2019 returning to its long-term pattern of strong growth after the slowdown in 2018 when the industry expanded by moderate two per cent.
Mr Norfaselizan Rahman, the Managing Director, Taj Bank, said the Islamic finance market penetration was currently low but fast growing.
Rahman said: “Islamic finance is known as a non-interest industry, we have a full set of players in a relatively new market and getting to know what Islamic market is all about.
“There will be some growth or learning curve in Nigeria with its own pattern of growth of Islamic finance development. The market penetration is low but it is growing very fast.
“Going by the financial inclusion of government, the unbanked population are in the North and North-East specifically,” he said.
Mr Peter Mushangwe, analyst, Financial Institutions Group, Moody’s Investors Service, said that Islamic finance industry was at its early.
Mushangwe noted that Nigeria’s banking system was in the negative and bound to face more challenges if the Gross Domestic Products (GDP) figures, which showed a slow growth in the non-oil sector was anything to go by.
“It is the early stage of development and the penetration is still very low and lower than one per cent of the GDP compared to other large Islamic systems, they are way larger than that.
“Also, the state of regulation is still developing and evolving in Nigeria and from the Islamic finance perspective, we view it as a stage of development,” he said.
Mr Elhadji Thiaw, Country Sales Specialist Senegal, Islamic Corporation for the Insurance of Investment and Export Credit, said the Muslims population globally were looking for ethical financing.
He said: “We are the only multilateral institution globally that are providing Sharia compliant risks and mitigation tools.
“As you might know, Muslim population worldwide are in dire need of ethical finance and we are having a key focus on Nigeria because it is a big player in the African continent.
“Also, in the banking industry, Nigeria is playing a major role in terms of providing financial mechanisms that can help people to double up their businesses.
“We have detrimental credit insurance policy which is a type of insurance that is supporting banks to have enough capacity in the international market,” he said.
