Nigeria’s Islamic finance industry has grown to about N5 trillion, with the Federal Government’s Sukuk issuances attracting subscriptions of N2.2 trillion in opposition to an preliminary supply of N300bn, the Managing Director of One17 Capital Limited, Abdullahi Idris Umar, has stated.
Umar disclosed this throughout an interview on Trust TV’s Business Daily, the place he stated the industry had expanded past banking into pensions, insurance coverage and capital market investments.
He stated the Federal Government had carried out seven Sukuk issuances, elevating greater than N1 trillion for infrastructure improvement, however famous that the instrument had the potential to finance tasks in different sectors.
“Federal government went into the market for N300 billion, it came out with 2.2 trillion Naira. That speaks to a demand that the market has for a product that is not in enough supply,” he stated.
Umar known as on the Federal Government and state governments to extend using Sukuk to finance schooling, healthcare, potable water provide and different important public providers.
“Islamic finance is like a toolbox. The question is what do you want to achieve and we will structure it for you. So whether it’s the creative industry, whether it’s water and environment, whether it’s oil and gas, name it,” he stated.
He stated Sukuk offered traders with an extra layer of oversight by means of annual audits to determine whether or not funds had been used for his or her meant functions.
“If I give you money and I have a third party that goes every year to check whether or not the money you have received has been used for the thing that you said it to be used for and then physically you see evidence of that thing,” he stated.
He added that the Federal Government had delivered 124 street infrastructure tasks by means of Sukuk issuances, with signposts at venture places exhibiting the place the funds had been deployed.
On authorities borrowing, Umar stated non curiosity financing ought to complement standard sources of funding relatively than exchange them, stressing that borrowed funds have to be channelled into productive sectors.
“I would not say government should stop borrowing. It’s a case of whatever we’re borrowing, is it going into effective use for the development of certain sectors that would have an impact on growth?” he stated.
Umar attributed the industry’s enlargement to regulatory developments, together with the Central Bank of Nigeria’s approval for Islamic monetary establishments in 2011 and the Securities and Exchange Commission’s tips for non-interest fund and asset administration firms in 2015.
He stated the industry had additionally recorded development in pension administration, disclosing that Fund VI, a non curiosity pension fund, elevated from about N7bn in 2021 to N54bn in 2024.
He additionally put the variety of non curiosity mutual funds in Nigeria’s capital market at near 25, saying the funds offered alternatives for traders to take part within the fairness and glued revenue markets by means of non curiosity merchandise.
On financing for small and medium scale enterprises, Umar stated non curiosity finance allowed monetary establishments to offer capital whereas sharing dangers with enterprise homeowners.
“What non interest finance does is that it’s able to put in capital and share the risk with the business owners,” he stated.
He cited partnerships between Jaiz Bank, the Small and Medium Enterprises Development Agency of Nigeria and the Bank of Industry as efforts to increase financing to companies.
Umar additionally stated the Bank of Industry had obtained approval from the Central Bank of Nigeria to determine a non-interest financing window, whereas the Federal Mortgage Bank of Nigeria had launched non curiosity mortgage financing, which was just lately launched in Kano.
He stated the enlargement of non curiosity monetary merchandise would supply extra alternatives for people and companies that keep away from curiosity based mostly transactions to take part within the monetary system.
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