November 15, 2021 / 4:47AM / By Bukola Akinyele-Yisau for WebTV / Header Image
The Securities and Exchange Commission, SEC renewed its commitment to the growth of the non-interest capital market segment in the Nigerian capital market.
Mr. Ibrahim Boyi, Executive Commissioner, Securities and Exchange C0mmission of Nigeria, made this point at the 5th African International Conference on Islamic Finance.
He said the forum provided an opportunity to discuss infrastructure financing in Africa by leveraging the Islamic finance ecosystem. He said the capital market plays a crucial role in enabling access to medium- and long-term funding for infrastructure development. According to him, the global infrastructure outlook in 2020, Africa required N184bn in 2019 and N190bn in 2020 to close the infrastructure deficit.
Citing the IMF's Africa economic outlook report 2020, he said from 2018; most African economies have a GDP ratio rising over 26%. A more significant proportion of African government services comes from the international capital market. He said there is a need for an innovative financing model which would address sustainability concerns and strike a balance between deficit and infrastructure development.
He said multilateral banks are essential sources of credit for infrastructural development. Islamic financial products support this initiative, as many jurisdictions have realized that Islamic finance was critical to economic growth.
Mr. Boyi said products like Sukuk, Islamic funds, and the Islamic equity index would work to finance infrastructure. Sukuk issuances are reputable bonds for infrastructure financing in the country.
Countries like Sudan, Gambia, Senegal, South Africa, Ivory Coast, Nigeria, Mali, and Togo have issued several Sukuk to finance infrastructure. He explained that from deepening the non-interest market, SEC introduced the framework that has encouraged Islamic product innovation, regulating 10 ethical Shariah-complaint funds.
He added that recently SEC approved a N30bn corporate Sukuk programme targeted at affordable housing development, N10bn was issued every series under the programme, which marked the first corporate Sukuk issuance to finance housing infrastructure in the country. As part of the capital market role, the SEC would encourage corporates to leverage the Islamic capital market by providing and ensuring an enabling environment. The capital market master plan 2015-2025 will bring 25% of the overall capital market capitalization in 2025.
The SEC Executive Commissioner acknowledged that Sukuk contributes to 52% of the outstanding bond issuances, which has led to SEC Nigeria working with IFSB to improve the quality of corporate governance and transparency to benchmark the country's non-interest market.
The event featured a session that focused on market trends in Islamic finance across Africa and projections for the future, highlighting the "long-standing constraints that limit the Nigerian Islamic finance industry/growth; plenary session 2 focused on data and telecommunications infrastructure and investment opportunities". The plenary session 3 discussed prospects of Shariah-compliant Fund Management, and the last session explored Sukuk structuring.
He said the solutions to the growth of Islamic finance are effective liquidity management instruments for interbank products, establishing Islamic treasury bills and having a non-interest rate-based commodities exchange.
In her closing remarks, the Chairperson 5th AICIF appreciated the speakers, participants and the conference management team for the success of this year's conference.