Stakeholders Agree On Deepening Collaboration To Boost Non-Interest Finance Market

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Wednesday, February 04, 2020 / 10.00AM / Bukola Akinyele for WebTV / Header Image Credit: WebTV

 

Stakeholders agreed to deepen collaboration to boost the growth of the Non-Interest Finance Market in Nigeria. The decision was part of the key resolutions at the Non-Interest Finance Executive Forum hosted by the Sterling Bank Alternative Finance Segment in Lagos.


Considering the evolution of the market (Non-Interest Finance) since 2012, the event was an opportunity for key players to explore how it can experience significant developments that will shape the Nigerian economy.


 In his opening remarks at the event the Executive Director, Sterling Bank, Mr. Tunde Adeola, giving an "Overview of the Non-Interest Banking Industry," highlighted the fact that Nigeria has raised two Federal Government Sukuk bonds and one Sub-National Sukuk in Osun state, bringing the total number to three.


From the analysis, Mr. Adeola noted that out of the N30.86trn Nigerian Debt Market, the Sukuk bond size estimated at N211.48bn, which was 0.69% of the total size.


Also, in the banking sector, the ED of Sterling Bank pointed out that out of the total assets of the Nigerian Banks, which was N37.207trn, the Non-Interest Banks accounted for N159.1bn which was 0.43% of the total size of the industry.


Dr. Bashir Oshodi the Group Head, Sterling Alternative Finance said the essence of the forum was to drive three major issues in the industry, which include;

  • Asset Expansion in the Industry
  • Easy flow of Liquidity for the market
  • Risk appetite alignment


He was of the view that the three approaches above will go a long way in repositioning the industry to serve its clients and expand its frontiers in Nigeria.


 The CEO of Lotus Capital Mrs. Hajara Adeola is a brief presentation on the "Sukuk Structures for States: Sub-National Sukuk models" also alluded to the point that there is still a long way to go in the Sukuk market, gaining momentum and making an impact in the economy.


She emphasized the need for collaboration amongst stakeholders in the Islamic Finance space, effective documentation, credit enhancement provisions, proper documentation and securitization to improve the Sukuks space in the country.


Mrs. Adeola acknowledged the fact that over the last seven(7) years since the Osun Sukuk and two (2) Sovereign Sukuks, the benefits of the instrument are now widely accepted.


According to her, "Nigeria's Non-Interest Finance market has matured, and today we have a complete ecosystem that supports Sukuk issuances."


Speaking further she highlighted The ecosystem developed to support Sukuk issuances in Nigeria include the following;

  • Securities and Exchange Commission, SEC Rules
  • Central Bank of Nigeria (FGN, State-on a case by case basis)
  • Permissibility for Pension Investment
  • Tax allowances
  • FMDQ and NSE Rules
  • Multiple market participants


Adeola stated that through the years, Lotus Capital has demonstrated that Sukuk can be applied to address socio-economic issues in the country from mass housing to infrastructure provision like road construction.


The Non-Interest Finance Executive Forum featured presentations from experts, analysts and industry players covering the following areas;

  • Nature of Contracts for Assets Syndication & Sukuk-Tosin Ajose, Lead Advisor, Deal HQ Partners
  • Guarantee Opportunities for Projects & Sukuk – Daniel Mueller, Head, Origination & Structuring, InfraCredit
  • Proposed and Existing Short-Term Liquidity Instruments for NIFIs – Alhassan Abdulkarim, Regional Manager, Jaiz Bank Lagos
  • Credit Framework for Assets, Projects & Trade Finance – Yinka Abiola Adams, Head, NIB Credit/Investment Risk, Sterling Alternative Finance


Part of the key steps agreed on by the stakeholders at the event include;

  • A resolve to deepen the Non-Interest Finance market in Nigeria
  • Explore avenues of generating more assets for the market
  • Encouraging the development of a robust Inter-Bank market in the Non-Interest Finance space
  • Exploring more ways of enhancing Sharia Compliant investments and market activities
  • Emphasize the fact that Islamic Finance should be viewed more as Ethical Finance

 

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