To increase the depth of the Nigerian capital market and unlock its potential, it is important for the market to attract more of the over $2tn assets under management in the Islamic financing industry, the Securities and Exchange Commission has said.
The Director-General of the commission, Mr. Mounir Gwarzo, said this in Kano on Monday at a regional roundtable on non-interest capital market organised by SEC, a statement by the commission said.
At the event, which had the theme, ‘Financing development through Islamic capital market – A viable alternative’, Gwarzo was quoted as saying that the commission was keen to increase financial inclusion and market depth by deepening the non-interest capital market space.
By growing non-interest financing, he said millions of Nigerians and people of faith would be able to invest their savings ethically.
The SEC DG, who said investors worldwide were increasingly allocating their resources to Islamic finance products, disclosed that by the end of 2014, total assets under management in the global Islamic finance industry surpassed $2tn.
He explained that although most people identify the capital market as an important source of medium-to-long term capital, t the capital market also had enormous potential to serve as a catalyst for financial inclusion.
Consequently, he stressed that going forward the SEC would focus on massive public enlightenment and stronger capacity-building initiatives.
He said, “Our focus for this roundtable is on Sukuk, one of the most important components of the Islamic financial system. The global sukuk market continues to witness remarkable growth since the 2008 global financial crisis as annual issuances have grown from $15bn in 2008 to almost $120bn in 2014.”
Gwarzo told stakeholders at the event that Malaysia, Saudi Arabia, UAE, Kuwait and Qatar, respectively, were the top five largest Islamic finance markets in the world as they account for the highest sukuk issuances and contribute more than half of the total assets under management in the industry,
He, however, argued that with Nigeria’s population more than that of all five countries put together, the country should be a major market in terms of global Islamic finance.
He said, “With over 80 million Muslims, Nigeria is home to far more Muslims than all the five countries put together. Additionally, Nigeria has a larger economy than them, with the exception of Saudi Arabia. There is, therefore, no reason why Nigeria should not be a major global Islamic finance market.”
The SEC DG explained that the commission had in 2013 set up an industry-wide committee of experts to develop a blueprint for the growth and development of Nigeria’s non-interest capital market.
According to him, the recommendations of the experts have been incorporated in the 10-year Capital Market Master Plan, which is currently being implemented by the SEC.
“The master plan sets a strategic direction for the non-interest capital market in Nigeria to attain at least 25 per cent of the total market capitalisation,” he said.
The Governor of Kano State, Dr. Abdullahi Ganduje, commended the efforts of the commission in the area of promoting depth in non-interest capital market.
He said Kano State would be glad to be associated with the current development by the SEC, stressing that the state would like to be seen as a base of Islamic banking and finance for financial market development.
Also, the Emir of Kano, Muhammad Sanusi II, revealed that when he was the governor of the Central Bank of Nigeria, structures had been put in place for the non-interest banking system in the banking industry.