By Sahabi Abdul
Nigeria’s emerging Islamic finance industry has a lot of scope for growth as the country has the fifth-largest population of Muslims worldwide, Fitch Ratings said.
Current activities in that finance segment in Nigeria include Sukuk bonds, Islamic banking and takaful issuances.
“We expect local-currency sukuk issuance to pick up as domestic investor appetite for such instruments is growing and the sovereign continues to seek alternative funding sources, as it faces heavy fiscal pressures due to the lower oil prices and the economic disruption caused by the coronavirus pandemic,” Bashar Al Natoor, Fitch’s global head of Islamic Finance, said in a research note today.
Under its 2015 to 2025 plan, Nigeria’s Securities and Exchange Commission set a target that non-interest financing should account for at least 25 percent of the capital market at the end of the decade.
President Muhammadu Buhari’s administration has issued three tranches of local currency sukuk bonds out of which 363.5 billion naira worth, or more than 900 million dollars, havent been repaid.
Subscribers include pension funds, insurance companies, assets and fund managers as well as retail investors, accounting for more than 17 percent of the investor base. African countries have less than a 2 percent share of the global sukuk and Islamic banking market.