An investment expert, Alhaji Abdullahi Umar, has disclosed that Nigeria’s Islamic finance industry grew to about N5 trillion so far, as the Federal Government’s Sukuk bond issuances attracted about N2.2 trillion subscriptions during an initial offer of N300bn to investors.
Umar, who is the Managing Director of One17 Capital Limited, gave this hind during an interview on Trust TV’s Business Daily, noting that the non-interest banking industry has expanded beyond banking into pensions, insurance and capital market investments.
According to him, the Federal Government has conducted seven Sukuk issuances thus far, raising more than N1 trillion for infrastructure development.
Noting that the debt instrument has the potential to finance projects in other sectors, the expert, therefore, urged the federal and state governments to increase the use of Sukuk to finance education, healthcare, potable water supply and other essential public services.
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He expatiated: “Islamic finance is like a toolbox. The question is what do you want to achieve and we will structure it for you. So whether it’s the creative industry, whether it’s water and environment, whether it’s oil and gas, name it.
“If I give you money and I have a third party that goes every year to check whether or not the money you have received has been used for the thing that you said it to be used for and then physically you see evidence of that thing”, Umar added.
He disclosed that the Federal Government had delivered 124 road infrastructure projects through Sukuk issuances, stressing that non-interest financing should complement conventional sources of funding rather than replace them, stressing that borrowed funds must be channelled into productive sectors.
Umar attributed the industry’s expansion to regulatory initiatives, particularly the Central Bank of Nigeria’s (CBN’s) approval for Islamic financial institutions’ operations since 2011 and the Securities and Exchange Commission’s (SEC’s) guidelines for non-interest fund and asset management companies which commenced in 2015.
In addition, Umar said that the industry had also recorded growth in pension administration, disclosing that Fund VI, a non interest pension fund, increased from about N7bn in 2021 to N54bn in 2024 while non interest mutual funds in Nigeria’s capital market had reached about 25, thereby providing opportunities for investors to participate in the equity and fixed income markets through non interest products.
Speaking on how the non-interest finance subsector had impacted on businesses, the expert pointed out that non interest finance had allowed financial institutions to provide capital, particularly for small and medium enterprises, while sharing risks with their owners
Specifically, he cited partnerships between Jaiz Bank, the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the Bank of Industry (BoI) as some of the efforts to extend financing to businesses.
This is even as he disclosed that the BoI had secured the approval of the CBN to establish a non-interest financing window, even as the Federal Mortgage Bank of Nigeria (FMBN) had also introduced non-interest mortgage financing, which was recently launched in Kano.
Umar expressed optimism that the expansion of non interest financial products would create more opportunities for individuals and business owners to cost efficiently fund their enterprises and enhance inclusion in the financial system.
