The Securities and Exchange Commission is resolute in developing a non-interest capital market.
At the maiden WebTV Islamic Finance Webinar, Mr. Abdulkadir Abbas, Head of Department, Securities, and Investment Services Nigeria, said in 2015 the commission designed a 10-year capital market master plan.
The plan aimed to promote non-interest capital market products and the target was to achieve 25 per cent of market capitalisation by 2025.
He noted that the 2020 Islamic Financial Services Stability Board Report revealed that industry assets grew by 11.4 per cent in 2019 to $2.44 trillion from $2.19 trillion recorded in 2018.
According to Abbas, the growth was supported by the increase in Sukuk issuances in the market. He said the Nigeria Islamic finance sector continues to grow because of growing interest and enthusiasm from institutional investors and new players in the market.
Speaking further, he said the strategic objectives of the capital market non-interest market was to focus on four pillars, covering:
Building a strong regulatory foundation for the non-interest capital market, encouraging the development of non-interest capital market stakeholders, encouraging the development of non-interest capital market products and recreating a regional non-interest capital market hub.
However, in 2008, SEC launched the first Islamic mutual fund by Lotus Capital, in 2010 Rules and Regulation on Islamic Collective Investment Schemes was released, in 2012.
NSE launched the NSE lotus Islamic Index to track the selected shariah-compliant equities. In 2013, SEC came up with a regulation in Sukuk issuance, the Osun State National Sukuk N11.4billion with 7-year tenure.
With regards to strategic initiatives, he said SEC was focused on strengthening institutional capacity, collaborating with the financial sector, conducting public awareness and education programmes on the non-interest capital market products to achieve a win-win situation in the market.
In 2008, SEC launched the first Islamic mutual fund floated by Lotus Capital, while in 2010 the Rules and Regulation on ICIS were released.
In 2012, the defunct Nigeria stock exchange launched the NGX lotus Islamic Index, to track the selected shariah-compliant equities.
In 2013, SEC came up with regulation in the Sukuk issuance, with Osun State’s National Sukuk bond of N11.4billion within a 7 -year tenure.
On the side of the achievements so far in the development of the Islamic capital market, he said SEC has engaged the Pension Commission and Central Bank of Nigeria. This covered issues around liquidity guidelines as part of the Apex regulator’s harmonized framework.
He added that the regulator issued Shariah governance, a Federal Inland Revenue Service exposed draft Tax regulation for NICMPs, and partnered with the Debt Management Office to issue a sovereign Sukuk to establish a benchmark yield curve for Nigeria.
The SEC official noted that the regulator has targeted specific sectors, on how to target the issuers, the stakeholders, and other market operators.
On the side of investment opportunities in the market, Abdulkadir Abbas said Nigeria is estimated as the largest economy in Africa with a gross domestic product of over $400billion with a significant Muslim population and infrastructure deficits in every sector.
He said, “Nigeria faces additional pressures from a rapidly growing population, also the various existing instruments coupled with strong investors’ appetite, will catalyze opportunities in the real estate, derivatives and alternative investment options encouraging socially responsible investment and sustainability”.
Mr. Abdulkadir admitted that the non-interest capital market is still at its nascent stage in Nigeria. He said the SEC remained resolute to continue to collaborate with market stakeholders to introduce regulations, to provide a level playing field for all participants in the markets.