Friday January 15, 2021
/ 1:00 PM / Bukola Akinyele-Yisau for WebTV / Header Image Credit: WebTV
The Next Planned Sukuk Issuance by the Federal Government of Nigeria which will be the fourth, should be deployed to fund the Agric, Health, Education, and Transportation sectors that can drive economic growth and economic stability. Dr. Mustapha Abubakar a Senior Lecturer in the Department of Banking and Finance at Ahmadu Bello University Business School, Zaria, made the point in a recent discussion around Islamic finance and economic development in Nigeria.
According to Abubakar, the total global Sukuk issuance in 2019 stood at $145.7bn as the Islamic capital market report for July 2020 also noted that issuance between 2001-2009 got to $1.247trn.
The finance teacher was optimistic that a fourth Sukuk Issuance would take place in 2021, as several countries were presently leveraging the non-interest finance instrument to support their economies. Speaking further Abubakar said non-interest banks could support households and MSMEs.
He was of the view that the introduction of the non-interest scheme in the textile, health, MSMEs, and creative industry financing, will position Islamic banks to contribute in the area of address the needs of their population.
In the area of products, he believed Islamic social finance can generate profit which constitutes some of the components of Islamic finance; such as Waqf, Qard, Zakat, and Microfinance. He said Islamic banks need to key into all these instruments.
Abubakar cited the example of the Bangladesh Islamic Bank as one of the earliest Islamic banking institutions in Asia, that has used all the previously mentioned instruments. He urged Islamic banks in Nigeria to emulate these steps to achieve poverty reduction.
He acknowledged the growth in the number of operators cutting across Islamic Banking, Takaful, and Islamic finance with more applications being made as part of the market's development.
He added that the Sukuk bond issuances by the federal and Osun State governments were another positive development in the Nigerian non-interest finance market.
Abubakar noted that investors could also make deposits through Mudaraba and Musharaka to continue to have unique income opportunities that are emerging.
"The impact of the three Sukuk issued so far on road infrastructure has been targeted at construction and the opening up of the economy, by providing easy linkages across town and cities and ease of movement on people and goods which will have a good impact on the economy," he said.
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