The global Islamic finance industry is projected to reach a total asset value of $4.94 trillion by 2025, with Nigeria poised to play a significant role in this growth, according to the 2021 Islamic Finance Development Report titled “Advancing Economies.”
Strong Corporate Social Responsibility Contributions
The report highlights that $1.28 billion was spent globally on Corporate Social Responsibility (CSR) initiatives. Nigeria and the Maldives ranked among the top five countries for CSR disclosure, despite the global average remaining low, showcasing Nigeria’s commitment to ethical financial practices.
Surge in Sovereign Sukuk Demand
Oversubscription of sovereign Sukuk in 2020 and the first half of 2021 reflects robust investor demand. Nigeria, alongside Egypt, re-entered the Sukuk market in 2020 after a hiatus in 2019, with 15 countries issuing Sukuk globally during the year.
Key Developments in Nigeria’s Islamic Finance Sector
Nigeria’s Islamic finance landscape saw significant advancements in 2021, reinforcing its position as a growing hub for non-interest finance in Africa:
Corporate Sukuk for Housing
The Nigerian Securities and Exchange Commission (SEC) greenlit a N30 billion Corporate Sukuk Program aimed at funding housing development, boosting infrastructure through Sharia-compliant financing.
Islamic Banking Education
In August 2021, Ahmadu Bello University in Zaria launched undergraduate and postgraduate courses in Islamic banking, fostering skilled professionals to drive the sector’s growth.
Non-Interest Banking License
Lotus Bank received a non-interest banking license from the Central Bank of Nigeria (CBN) in June 2021, expanding access to Sharia-compliant financial services.
Islamic Development Bank Support
The Islamic Development Bank (IsDB) allocated $150.52 million for Nigeria’s Special Agro-Industrial Processing Zone and $29.75 million for Phase II of the Front-End Engineering Design, supporting agricultural and infrastructural development.
Oversubscribed Sovereign Sukuk
In December 2021, Nigeria issued its fourth Sovereign Sukuk worth N250 billion, which was oversubscribed by N865 billion, achieving a 346% subscription rate, underscoring strong investor confidence.
Sharia-Compliant Pension Fund
The National Pension Commission (PENCOM) introduced Fund VI, a Sharia-compliant non-interest fund, enhancing ethical investment options for pension holders.
Industry Engagement through Webinars
Islamic Finance Weekly hosted two webinars on the capital market and Takaful, fostering collaboration among regulators, operators, and specialists from the SEC and the National Insurance Commission (NAICOM).
Nigeria’s Strategic Role
With a large Muslim population and supportive regulatory frameworks, Nigeria is leveraging Sukuk issuances and Islamic banking to drive economic growth and infrastructure development. The SEC’s target to list 50 Sharia-compliant products with a market capitalization of N5 trillion by 2025 aligns with the nation’s ambition to become a leading Islamic finance hub in Africa.
