How The Capital Market Supports Non-Interest Finance In Nigeria


Wednesday, November 27, 2019 / 3:30 PM / Bukola Akinyele for Proshare WebTV / Header Image Credit: WebTV


On the sidelines of the just concluded 4th edition of the African International Conference on Islamic Finance, Proshare WebTV spoke with the MD/CEO of Lotus Capital, Mrs Hajara Adeola, who shared her insights into the role the capital market in the development of non-interest finance in the country.


Mrs. Adeola, with Lotus Capital, has been at the forefront of developing Islamic Finance and non-interest financial products in Nigeria. The chief executive of Lotus Capital said that the ten year Securities and Exchange Commission (SEC) capital market master plan (2015-2025), made provisions for supporting the growth of the non-interest financial market.


This, according to Adeola, was a deliberate attempt by the apex regulator of the capital market to promote and create an enabling environment for the development of a viable, non-interest financial market in the country.


She said that the Central Bank of Nigeria also played its part in the licensing of non-interest banks and also established a Joint Committee on Alternative Financing in 2013.


The Committee was instrumental to the evolution and growth of the alternative financing space in the Nigerian financial market ecosystem.

She stressed that one of the promises of Islamic finance or non-interest finance is the prospect of deepening financial inclusion in Nigeria, and reaching the unbanked population in the rural areas.


The Lotus Capital boss noted that there are people who do not want to participate in the conventional interest-based market, but who could still participate through non-interest bearing financial products.


"While there have been large strides in non-interest based financial products, the accessibility or availability of non-interest capital market or banking products to the average man on the street is not where it should be at the moment," She added.


She noted that there are some new entrants into the market, from banks, Takaful insurance companies and new mutual funds that have made their presence noticeable.


Giving further information on the contribution of  Lotus Capital to the non-interest financial market, Mrs. Adeola highlighted the Halal Fixed Income Fund and the Halal Investment fund as part of the portfolio of products that are being promoted to stimulate the growth of the market.


"We advised the Federal Government Sukuk in 2017 and 2018, and both of them were successful in terms of investor participation.  I believe Islamic financial institutions should collaborate to provide the needed services to the non-interest market" Adeola said.


She said the structuring of bond Issues in Nigeria does not lend itself to the retail market. In her view, Bond Issues have been targeted more at the institutional market where the interest is large.


The pioneer leader in Islamic Shariah Asset management believed a lot could be done through the development of products to reach out to the retail market in the country.


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