Why an Enabling Regulatory Environment is Key to the Growth of the Islamic Fintech Industry


Friday, July 09, 2021 / 11.00AM / Bukola Akinyele for WebTV/Header Image Credit: EcoGraphics


An enabling and supportive regulatory environment is vital to the growth of the Islamic fintech industry in Nigeria. The Co-founder of Kanz Invest, Mr. Tope Salahudeen, said this while discussing "Prospects for the Growth of the Islamic Fintech Industry In Nigeria".


The technology maven argued that an enabling environment was key for Africa economies to be competitive and innovative he noted that there was a need for improved access to funding.


Speaking on the role of fintechs in driving financial inclusion across Nigeria and Africa, Salaudeen was of the view that financial technology-driven goods and services result in profitable enterprises that provide good superior returns to investors than other conventional market offerings.


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Discussing how Islamic fintechs can drive innovation and financial inclusion, he said Islamic financial institutions have some limitations as they operate in a heavily regulated industry that restricts innovativeness.


Fintech companies according to Salaudeen leverage the digital economy to provide access to commodities or services that conventional channels find difficult, he observed that Islamic financial institutions are usually unable to serve certain markets the way fintech companies do.


This is why Islamic fintech companies from his perspective,  are important for financial inclusion as they can reach the unbanked in rural parts of the country. 


Concerning what markets like Nigeria need to do to unlock opportunities for investments and achieve a larger scale, he said the challenge faced was the relatively low level of education in the country. Many people do not know what Islamic fintech is, prompting the need for further awareness.

He stressed the importance of innovation with Islamic fintech hub incubators and accelerators to drive technology. 


Salaudeen cited Malaysia, UAE, Saudi Arabia, Dubai, and Qatar as countries in the top five financial service providers in the Organisation of Islamic States (OIC) market. With the right framework, he insisted that innovation and creativity in Islamic financial technology could be supported with the required funding.  


The technology entrepreneur advised regulators like the Securities and Exchange Commission (SEC) and Central Bank of Nigeria (CBN) to provide the required framework is and collaborate that will enable players like Islamic Fintechs to thrive.


He recommended that for Nigeria to get regulations that will thrive they need to have a unified body that will interact with Fintech regulators and a body that protects people's interest, thereby attracting investors both locally and internationally. 


Salaudeen tasked the Nigerian federal government and Islamic finance banks to sponsor youth competitions in innovation, noting that the Islamic fintech industry is unique as it takes input from several people, and this calls for synergy between Islamic finance scholars, finance experts, and tech entrepreneurs.


He described Malaysia as a leader in Islamic finance, that is willing to continue to explore innovative ways of growing the market.


According to him, Malaysia is investing in Islamic finance education and research as it plays a big role in leveraging angel networks and venture capital firms. He added that the Malaysian government has provided funding and friendly regulations to move the industry forward, and also has the genuine interest and desire of uplifting Muslims in Malaysia. 


He urged the government in Nigeria to show a genuine desire to drive policies that can reduce poverty, particularly among Muslims.  In developing  Islamic finance in Nigeria, he called for conscious steps in supporting local industries.


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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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