Total assets under management in the global Islamic finance industry was in excess of $2 trillion (about N394 trillion) by the end of 2014, the director-general, Securities and Exchange Commission, SEC, Mounir Gwarzo, has disclosed.
Mr. Gwarzo said the industry growth had continued to flourish with the global Sukuk market recording remarkable expansion after the 2008 global financial crisis.
Sukuk is an Islamic finance certificate – similar to a bond in Western finance – that complies with Islamic law, Shariah.
The director, who spoke at the second Regional Roundtable on Non-Interest Capital Market in Sokoto on Monday, said annual issuances from Sukuk investment had grown from $15 billion in 2008 to almost $120 billion in 2014.
Mr. Gwarzo said the focus of the roundtable was on Sukuk – one of the most important components of the Islamic financial system.
He said while most people identify capital markets as an important source of medium-to-long term capital, few realise the amazing potential of capital markets to serve as a catalyst for financial inclusion.
“SEC is determined to unlock this potential of the Nigerian Capital Market,” Mr. Gwarzo said.
He said in particular, SEC was aware of the need to deepen the non-interest capital market space to enable millions of Nigerians and people of the Islamic faith to invest savings ethically.
“Investors worldwide are increasingly allocating their resources into Islamic finance products,” Mr. Gwarzo said.
The DG said last year was widely considered a landmark year for Islamic finance, especially with debut Sukuk issuances by countries such as the United Kingdom, Hong Kong, Senegal, South Africa and Luxemburg.
He said the year also witnessed continued strong interest from key markets of Malaysia, Saudi Arabia, the United Arab Emirates (UAE) and emerging markets like Turkey and Indonesia.
Mr. Gwarzo added that the Sukuk market was emerging on a global scale as a viable alternative source of funding.
In Nigeria, the SEC boss said the commission implemented a number of reforms aimed at deepening the non-interest capital market.
For example, he said, the commission focused on the regulatory framework, reviewing the rules on Islamic Fund Management and introducing new rules on Sukuk issuance.
These two legal frameworks, Mr. Gwarzo pointed out, have encouraged Islamic products innovation with the registration of five ethical/Shariah compliant funds and the over-subscription of Nigeria’s first ever sub-national Ijara Sukuk by the Osun State government in 2013.
He said SEC was also considering modalities for setting up a Sharia Advisory Council as a body of experts to advise SEC and the market on non-interest product and their applications.
Mr. Gwarzo said the state governments could leverage on the Sukuk market to raise funds for developmental projects.
Going forward, he said, the focus of the SEC would be on massive public enlightenment and also stronger capacity building initiatives, adding that was what informed the idea of hosting regional events as the Roundtable
He said the commission was working with the Debt Management Office, DMO to ensure Nigeria issued her first sovereignSukuk that would provide the needed benchmark for other categories of issuers.
“We are hopeful there will be a significant progress on this front before the end of 2016,” he said.
Sokoto State governor, Aminu Tambuwal said the state government had since resolved to embrace Sukuk, which he said was the only Islamic capital system that conformed with the religious and cultural beliefs of the people of the state.
The governor, who was represented by the commissioner for Finance, Sa’idu Umar, said the system provided alternative sources of funds, especially in the face of the dwindling revenues as a result of the falling global oil resources.