THE securities and Exchange Commission (SEC) is considering additional regulatory initiatives to strengthen Nigeria’s non-interest bond market to provide alternative financing sources to governments and additional investment opportunities for investors.
Its Director-General Mr. Mounir Gwarzo said the capital market regulator was aware of the need to deepen the non-interest capital market segment to enable millions of Nigerians and people of faith invest their savings ethically.
He said globally, investors were allocating their resources into Islamic finance products, noting that Sukuk bond, one of the most important components of the Islamic financial system, can provide state governments with funds to implement their developmental agenda.
According to him, while most people identify the capital market as an important source of medium-to-long term capital, few actually realise its amazing potential to serve as a catalyst for financial inclusion.
“SEC is determined to unlock this potential of the Nigerian capital market,” Gwarzo said.
The Commission has implemented some reforms aimed at deepening the non-interest capital market. They include review of the regulatory framework for the non-interest segment and issuance of rules on Islamic fund management as well as rules on Sukuk issuance.
Gwarzo pointed out that the Islamic fund management and Sukuk rules have encouraged Islamic product innovation with the registration of five ethical and Shariah-compliant funds and the issuance of Nigeria’s first-ever sub-national Ijara Sukuk by the Osun State government in 2013, which was oversubscribed.
“We are also considering modalities for setting up a Sharia Advisory Council as a body of experts to advise SEC and the market on non-interest product and their applications,” Gwarzo said.
Speaking at a roundtable on the non-interest capital market organised by the SEC in Sokoto, the Sokoto State capital, Gwarzo said state governments could leverage on the Sukuk market to raise funds for developmental projects.
He added that henceforth the focus of SEC would be on massive public enlightenment and also stronger capacity building initiatives.
He said the Commission had been working with the Debt Management Office (DMO) to ensure that Nigeria issues her first sovereign Sukuk that would provide the needed benchmark for other categories of issuers.
He expressed optimism that there would be a significant progress on the issuance of Nigeria’s sovereign Sukuk in the year.
Sokoto State Governor Aminu Tambuwal said the government had since resolved to embrace Sukuk.
Represented by the state Commissioner for Finance, Alhaji Sa’idu Umar, the governor said Islamic capital system conforms with the religious and cultural beliefs of the people of the state.
Tambuwal said the system provides alternative sources of funds, especially in view of the dwindling revenues caused by the falling global oil resources.
Zamfara State Governor, Alhaji Abdulazeez Yari, who was represented by Alhaji Shehu Baraya, the state’s Acting Accountant-General, urged Nigerians to embrace Islamic capital for national development.
The Sultan of Sokoto, Alhaji Sa’ad Abubakar, represented by the Emir of Gwandu, Alhaji Ilyasu Bashar, commended the commission for organising the roundtable.
Abubakar said Sukuk provided alternative sources of funds for the development of the nation.
Total assets under management in the global Islamic finance industry had surpassed $2 trillion by the end of 2014 as the global Sukuk market continues to witness remarkable growth since after the 2008 global financial crisis.
Annual issuances have grown from $15 billion in 2008 to almost $120 billion in 2014; 2015 was considered a landmark for Islamic finance, especially with debut Sukuk issuances by the United Kingdom, Hong Kong, Senegal, South Africa and Luxemburg.
The year also witnessed continued strong interest from key markets of Malaysia, Saudi Arabia and the United Arab Emirates (UAE) and emerging markets, such as Turkey and Indonesia. There is no doubt that the sukuk market is emerging on a global scale as a viable alternative source of funding.