NSE CEO highlights opportunities for Islamic finance, banking in Nigeria



Islamic finance has continued to prosper and gain prominence across the globe spurred by the adoption of socially responsible and investment principles. The CEO of the Nigeria Stock Exchange Mr. Oscar Onyema, OON made this point as a keynote speaker at the 2020 NSE/Red Money Islamic Finance Nigeria On Air Forum Report 2020, which explored how Islamic Finance and Banking can flourish in the country.
He said, from the Islamic Finance Development report 2019, the $2.5trn industry recorded a growth of 3% in 2018 from $2.4trn in 2017. This positive growth was fuelled by the increase of Sukuk Issuances amidst continuous appetite from investors for alternative assets.
Onyema believed Islamic banking is beginning to take shape in Nigeria with the emergence of new regulations and markets to support the industry growth, which has resulted in a growing number of players resulting in two Islamic banks, four takaful insurance companies, several microfinance banks, and managed funds.
Also, he noted that the Islamic finance industry has recorded steady growth since its inception in the 1970s. S&P global ratings industry estimated that the $2.4trn industry is expected to register role to meet single-digit growth in 2020 and 2021 amidst the impact the public amidst economic crises fuelled by the Covid19 pandemic.
Looking at the investor base for the Sukuk the NSE CEO acknowledged that it has also expanded with several sovereigns and financial institutions from Hong Kong, UK, Malaysia, Indonesia, Pakistan, GCC Countries and Turkey participating.
He was of the view that the Osun State N10bn 7yr Ijara Sukuk in 2013 and the appetite of increasing ethical finance in Nigeria, has brought to the fore 3 successful Sukuk issuances with a total of N350bn by the FGN from 2018 till date which was largely oversubscribed.
Speaking further he believed that as normalcy returns, the Islamic finance industry had a critical role to play in global economic recovery. In June 2020, the Islamic Development Bank (IsDB) raised $1.5bn with a first Sukuk of sustainability designed to have a Covid 19 for its member countries.
He spoke further on other developments which included the emergence of new Islamic banks in the Philippines, Algeria and Afghanistan as well as the development of new liquidity tools in the UK and Pakistan that aided the growth of the existing Islamic banking market.
He believed the advent of the Covid-19 pandemic is shifting the dynamics to the industry and the outbreak may create new opportunities for Islamic finance markets by accelerating socially responsible investing, sustainability and digitization.
Also, in June 2020 he informed stakeholders that the Indonesian government-issued US$2.5bn global Wakalah Sukuk in 3 three tranches including a $759m Green Sukuk to support the government coronavirus control programme.
Speaking on the regional prospects with the African Continental Free Trade Agreement (AfCFTA) in January 2021, tasked stakeholders in the Islamic finance market to explore opportunities to promote continental trade by providing shariah compliance trade finance products. As well as deploying trade development programs to shift greater attention to socio impact, sustainability and innovation in trade finance.
The NSE CEO made the point that post-pandemic, Islamic finance in Nigeria and the World at large must work towards more integrated and transformative growth through digitization.
According to Onyema, financial technology elements such as smart contract, tokenized assets and crowdfunding platforms would facilitate a greater number of Islamic finance assets at the bottom of the investment pyramid. In a post-COVID-19 world, he said Islamic financial institutions should provide more touchpoints with MSMEs with better standardized processes.—Agencies


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