Friday, August 27, 2021 / 11:00 AM / by Bukola Akinyele-Yisau for WebTV / Header Image Credit: Marble Capital
Non-Interest finance products have played a critical
role in the growth and development of the Nigerian capital market ecosystem.
Mr. Akeem Oyewale, the CEO of Marble
Capital, made this point while speaking on "Islamic Finance And the Investment Opportunities in
the Capital Market" at a recent webinar.
According to him, the
Islamic finance segment of the financial market presents numerous opportunities
for enhancing the economic fortunes of Nigeria, and over 80 countries have adopted this.
He said the
non-interest finance instruments,
assets, and products had been identified as catalysts for leading and
developing economies globally.
Looking at the Islamic Finance and
Investment Opportunities in the Capital Market, Mr. Akeem Oyewale highlighted
significant investment opportunities in the non-interest capital market.
According to him, the Islamic capital market products available include;
are certificates issued to investors representing a tangible asset, service,
project business or joint venture. The asset must be Shariah-compliant. Sukuk
has been issued so far by Osun State and three times by the Federal Government.
Sukuk is the most used instrument in
Islamic finance, making investors own a piece of certificate in an asset.
Islamic finance operators encourage investments in fixed assets. Oyewale
noted that if non-interest investments were in the capital market, the last
financial crisis would have been averted.
He added that the Islamic capital market
allows individuals/investors to invest based on tangible assets, and Sukuk is a
common way of representing that. The instrument has benefitted more than the
conventional bond because it is asset-backed and asset-based.
Islamic capital investment is equity, such as the lotus Halal fund
or Lotus Islamic index listed on the Nigerian Stock Exchange. This allows
investors in the capital market to invest in Halal-compliant stocks. From the
analysis, this has performed better in terms of dividend yield, actual capital
appreciation than the relatively non-Halal stocks.
Commodities involve investing in securitized products that are asset-backed and
not prohibited under the ShariÃ¡h law. Akeem explained that the commodities
are Halal compliant. Investors need to be aware that the
opportunities to invest in shariah-compliant commodities exist to take
advantage of the securities like agricultural products.
Mutual Funds- The
Islamic mutual funds are open-ended investments that pull investor's finances
together to invest in various Shariah-compliant securities, like Islamic equities
commodities and Sukuks or a mix of multiple securities.
It allows individuals to invest a small
amount of money and diversify their asset classes from N10,000 investment.
These include Stanbic IBTC Shariah-compliant fund, United Capital Sukuk fund,
Lotus fund, amongst others.
Islamic Unit Trust- This is
similar to a mutual fund, and it is the type of investment used to plan for
Hajj pilgrimage, marriage, or mortgage.
Islamic Exchange Traded Fund (ETFs) are also open-ended baskets of securities that track
an index (es) / sector or commodities or other assets, but which can be
purchased or sold on a stock exchange like a regulator stock. The Islamic ETF
product is not yet in Nigeria.
Islamic Derivatives- Derivatives are contracts that derive their value
from the underlying asset and agreement and are helpful for risk management.
This fundamental agreement is called hedging and is a forward contract. It is
preferred for commodities investments.
The growth of Islamic Finance in Nigeria
- In 2011, the guidelines for the
regulation and supervision of the non-interest institutions offering
non-financial services in Nigeria.
- In 2013, Osun State Sukuk bond was
issued and oversubscribed
- In 2016, Jaiz bank upgraded to a
- In 2017 September, the FGN 100bn
Sukuk bond was issued
- In 2017, the CBN issued the
guidelines for the regulation and supervision of non-interest Islamic
- In 2018 December, the FGN issued
N100bn Sukuk bond
- In 2019, TajBank commenced its operation
as the 2nd non-interest bank
- In 2020, the FGN 150bn Sukuk bond
Issuance witnessed 446% oversubscription, and Osun State Sukuk was fully
repaid to investors.
- In 2021, the Central Bank of
Nigeria granted Lotus Bank
a license to
commence non-Interest Banking
Benefits of Islamic Capital Markets
Offers Muslims and other ethically conscious
investors the opportunity to invest without comprising their
A good source of funds for asset growth
Reducing economic disparity
Promotes social justice
Ease of payment of funds acquired
Enhancing ethics, equity, and property rights
Offers highly competitive returns
Expanding the market participants
Perfect for financing large infrastructure projects
In Islamic finance, all investments must
adhere to Islamic rules of investments and also comply with the regulations
governing the conventional counterparts.
He believed that the Islamic Finance
industry was well poised for growth and should be well utilized by all
entities, individuals, organizations and government.
- SEC Set to Support the Development of Nigeria's Non-Interest
- IFSB and SEC Nigeria Seminar Explores
Investor Protection and Transparency
- Islamic Finance to be Integrated into Capital Market Studies
Curriculum in Nigeria - Akeem Oyewale
- Nigeria Ranks Fourth in Countries Covered in
Islamic Finance Research Papers Globally in 2020
- Achieving Instrumental Islamic Finance Education in Nigeria -
Dr. Muhammad Yusuf
- Human Capital Development Central to Islamic Finance -
- Compliance with Sharia Principles Crucial to
Improving Ratings of Assets - Bashar Al Natoor