March 01, 2020 / 1.00PM / Bukola Akinyele for WebTV / Header Image Credit: WebTV
As Non-Interest Finance evolves, the regulatory environment for its success has come under greater attention.
Mrs Adeola Sunmola a lawyer and Partner, Udo Udoma and Bello Osagie in an interview with WebTv was of the opinion that regulatory clarity and increased awareness was vital to the growth of the market.
She conceded that there has been a positive response from regulators in the money and capital markets as regards to the development of Non-Interest Finance in the country.
Mrs Sunmola said the Securities and Exchange Commission (SEC), the Central Bank of Nigeria (CBN) and the National Insurance Commission (NAICOM) have in their various roles worked out ways for the deepening of Non-interest Finance across the capital market, banking and insurance sectors.
According to her Islamic finance is broadly split into several parts such as;
She highlighted the support of the Federal Government to the Islamic Finance market, through the Debt Management Office (DMO) reflected in two FGN Sukuk issuances in the country, between 2017 and 2018.
One area she noted that effective regulations can help is in the housing sector, where Nigeria faces a challenge of a 22m housing deficit that will require financing measures to address.
The legal expert called for an enabling regulatory environment that facilitates provisions to create Islamic mortgages.
"Currently there is a gap in the law in relation to having products that speak to Islamic Financial mortgages" She said.
In terms of promoting financial inclusion, she was of the view that the apex financial market regulator, the Securities and Exchange Commission (SEC), has guidelines that regulate the issue of non-interest offerings such as Sukuk.
She cited Northern Nigeria as an example of a region that has a huge unbanked population, that should be open to asset classes that are shariah compliant.
Giving insight on the proposed issuance of a Third Sukuk, Sunmola said the proceeds would be used for the constructions of roads across the six geo political zones in the country. She pointed out that there was no bias in terms of where the roads are located, as it is designed to drive socio-economic development of the nation.
She stressed that the Sukuk promotes accountability and comes under thorough scrutiny in terms of how the proceeds are utilized.
Speaking on the 2020 outlook for the Non-Interest market in Nigeria and Africa, she expects that there will be more sub-national sovereign Sukuk issuances in the year.
"Many of the states are looking to raise capital for Infrastructure projects and they are looking to raise capital from the non-interest segment of the financial market as a result, many states will look into sukuk as a viable instrument for raising capital" She said.
In terms of participation in the third Sukuk, especially as it concerns the millennials who are not aware of Islamic finance, she said the major way of engaging them would be through communication and education by way of social media.