Director General of the Securities and Exchange Commission (SEC), Mr. Lamido Yuguda has said that the non-interest finance sub-sector of the nation’s financial system holds great potential in furthering the development of the capital market and the growth of the nation’s economy.
The investment expert, who spoke at a one-day Webinar hosted by the SEC with the theme ‘The Imperative of Non-Interest Capital Market for Pension Industry’, said non-interest finance product had been rated as one of the most appropriate options for the funding of long-term infrastructure.
The capital market regulator said the event was the first in a series to be organized by the commission and it is aimed and providing a conducive platform for knowledge and experience sharing among participants and to enlighten them on this way of investing and financing.
The Director General explained the pension industry remained one of the fastest growing sectors in the nation’s economy with assets under management of N13 trillion as at the end of Q3 2021, adding that of this impressive amount, less than N80 billion is invested in Sukuk, representing a little less than 1% of total pension assets under management.
He advocated: “This calls for more innovative financial products to deepen our market and sustain the growth in the industry especially in the non-interest segment. We strongly believe that the capital market has a leading role to play in this regard by providing a variety of long-term investable products to service the needs of the pension industry as well as other investors with similar focus.
“It is encouraging that the national pension commission has taken concrete steps to improve the regulatory framework for the investment of pension funds in the non-interest capital market by the introduction of operational framework for the non-interest fund.
“This will no doubt provide an additional opportunity for retirement savings account holders and retirees to invest their savings in financial instruments that are aligned with their life goals and objectives. Indeed, the operationalization of the funds definitely accelerates the national financial inclusion agenda while increasing the quantum of investible funds by unlocking the untapped capital”, the Director General added.
Yuguda pointed out that as at September 2021, the total assets stood at N7.79 billion, representing about 0.059% of total pension assets under management and expressed the hope that the fund assets would grow with robust public awareness, education programs and capacity building of stakeholders through seminars, workshops and programs such as this.
He expatiated: “The SEC in realization of the potential of the noninterest segment of the capital market, has a veritable avenue for providing long-term capital launched its 10-year capital market masterplan with a very strong focus on the development of the non-interest capital market segment through awareness creation, capacity building, review of regulatory framework and development of non-interest projects and services.
“I am happy to report that a significant number of its strategic initiatives have been achieved as several Sharia/ethical funds have been registered by the SEC. In addition, the SEC collaborated with the MO towards providing a framework for the issuance of the first FGN Sukuk in 2017 and two other issuances of Sukuk have followed.
“However, we believe that more work still needs to be directed towards achieving other critical initiatives of non-interest in our capital market plan.
“At SEC, we have been approached by a number of potential corporate issuers of scope and we have registered the first issuer of scope, we are aware that a number of corporate issuers are interested in issuing Sukuk, but some of them have noted that they will like clarity on the neutrality of the Sukuk vis-a-vis corporate bonds.
“The increased supply of scope will hasten the development of the non-interest capital market because I am confident that the non-interest finance experts gathered here today will invoke the interest and attention of participants and enhance their knowledge of the subject to eventually lead to the birth of promoters and on takers of non-interest products of the capital market”, Yuguda added.
In her goodwill message, Director General of the National Pensions Commission, PenCom, Haji Aisha Dabir Umar, commended the SEC for organizing this webinar on the imperative of non-interest capital market products for the pension industry.
Represented at the forum by the commission’s Commissioner Administration, Dr. Umar Farouk Aminu, the PenCom’s Director General commended the collaborative efforts of her commission and SEC, which has over the years laid acceptable values and good governance standards in their investments of pension funds in the Nigerian capital market.
She said: “As you may be aware, Pencom, recently released a list of operational guidelines for non-interest funds. It is our belief that this singular act will promote financial inclusion in Nigeria, and particularly drive enrolment in the macro pension fund.
“It is my call that industry practitioners gathered here will come up with practical measures to facilitate the issuance of non-interest instruments in the market”, Umar added.
She restated the PenCom’s commitment to ensuring that all instruments meet this requirement towards deepening the capital market to sustainably introduce non-interest products.
In his remarks, Secretary General of the Islamic Financial Services Board, Dr. Bello Danbatta said Islamic finance is a complementary system adding that no system would be able to develop without integrating it in its financial system.
He said: “Sustainable finance is not complete without integrative finance and integrative finance is only possible when you have non-interest and interest based finance.”
