Sunday, February 01, 2020 / 05.00PM /
Bukola Akinyele for WebTV / Header Image Credit: WebTV
With the plan by the Debt Management Office of Nigeria (DMO) to issue a third Federal Government Sukuk bond, Islamic Finance Weekly engaged Mr. Charles Fakrogha Chief Learning Officer for City Code Trust Investment Company Limited and also a broker-dealer at the Nigerian Stock Exchange, to share his perspective on this development and how Non-Interest Finance can deepen the capital market.
He noted that at a point in time, all the regulators have been looking for ways to deepen the market to attract different sorts of investors, which will make things very easy for issuers. Fakrogha noted that market stakeholders are doing what they can to ensure that the market is robust and green (positive in performance) which will attract different types of investors, both local and international, that will enhance the capital raising pace and issuances that have come to the market.
Looking at the first Two FGN Sukuk Bonds (2017 and 2018) issued in the market at N100bn each and the low retail investor participation level, Fakrogha said the major challenges facing the Sukuk was a lack of awareness and the belief some people had that the word "Sukuk" is an Islamic affair.
"It is an innovation from the Muslim world, but non-muslims can also benefit from it. The bonds and money raised are going into projects in the society that will not discriminate whether you are a Muslim or a Christian," Fakrogha said.
According to him, through a Sukuk bond, there are opportunities to build a facility, generate electricity or do an environmentally-friendly project that the society will benefit immensely and improve socio-economic activities.
He was of the view that there is no discrimination when it comes to Sukuk bonds, which was important for potential investors to understand and key into the opportunities it provides.
On the NSE Islamic lotus index, which dipped by -17.87% in 2019 and what should boost the performance of the index in 2020, he singled out the general economic conditions in the country last year as the major factor for a dip in performance.
Fakrogha called on those who have adopted Islamic finance into their investment class, to woo others so its penetration can improve the capital market.
Giving further insight, he said with the right economic policies in place in Nigeria and commitment from the operators and the issuers; there will be a significant improvement in the NSE Lotus Islamic Index in 2020.
On how Nigeria can position itself as a key Islamic finance hub in the globe, he acknowledged the fact that Islamic finance is a new space in the Nigerian market, and people have not embraced it even among the Muslims folks.
He added that some people did not understand the intricacies around Islamic finance, its fundamentals and drive for supporting infrastructure financing and sustainable development in the country.
The securities dealing member emphasized the need for a lot of studies, research and training for stockbrokers, operators and executives in the financial market to create more awareness for them to understand what Islamic finance is all about.
"Islamic finance is enterprising, a joint project, a partnership, and also entails the sharing of profit. The intricacies and how it applies should continue, and it is until operators understand the basics of Islamic finance that we will see an improvement in Islamic finance products in the Nigerian capital market," Fakrogha said.
Speaking on the planned visit of Islamic Development Bank President (IDB) to Nigeria this year, the broker-dealer described the visit as a welcome development that will reinforce Nigeria's status as a leading investment destination.
He called on operators and key players in the Non-Interest Finance market to invest more in roadshows and enlightenment programs that will explain the principles of Islamic financing, break it down in a way that average investors will understand it and how it benefits them.
According to him, there must be robust strategies by all the stakeholders in the Islamic Finance ecosystem to work together and explore how to deepen the market in Nigeria.
Since the establishment of the Alternative Finance Committee in 2013, areas that Nigeria has seen increased activities in Islamic Finance include the Sukuk bonds issuance, establishment of Islamic Finance Banks like Jaiz bank, the introduction of four Takaful insurance companies and the activities of the NSE Lotus Islamic Finance index.