Nigeria`s Growth Path In Islamic Finance

Mr. Banji Fehintola, Senior Director and Head of Treasury and Financial Institutions at the African Finance Corporation (AFC), recently shared insights on the future of Islamic finance in Nigeria during his appearance on Proshare WebTV’s “Islamic Finance Weekly.” Fehintola underscored that enhancing standardization and boosting awareness is pivotal to accelerating the growth of the Islamic finance sector in Nigeria.

Fehintola highlighted that the global Islamic finance industry faces significant challenges due to a lack of standardization, which has impeded its ability to issue conventional Eurobonds. He stressed that addressing the issue of premiums on Islamic financial products is crucial for improving their acceptance and visibility in the Nigerian market. By overcoming these challenges, Islamic finance could emerge as a robust alternative within the global financial landscape, known for its resilience and superior ability to absorb economic shocks compared to traditional finance.

To further develop the Islamic finance sector in Nigeria, Fehintola called for increased awareness through a variety of channels. He recommended organizing more conferences, seminars, and research reports, and enhancing media coverage of Islamic finance. This educational push aims to help Nigerians understand the benefits and value of Islamic financial products, which are designed to deepen financial inclusion and contribute to economic prosperity.

Fehintola also praised Nigeria’s recent Sukuk issuances, which have totaled N200 billion over the past two years. He described these Sukuk bonds as a significant advancement in strengthening the local capital market. The successful issuance of these bonds marks a positive development for the Nigerian financial sector, and Fehintola commended the Federal Government of Nigeria for its proactive approach to adopting Islamic financial products. He expressed anticipation for the upcoming third round of Sukuk issuance and hopes to see an increase in corporate Sukuk issuances shortly.

In his discussion, Fehintola also referenced international examples, noting that countries like Luxembourg, the United Kingdom, and South Africa have taken the lead in issuing foreign-denominated Sukuk. This global perspective highlights the growing acceptance and integration of Islamic finance into mainstream financial markets.

Additionally, Fehintola highlighted the AFC’s strategic role in harnessing the liquidity provided by Islamic financial assets. The AFC has been at the forefront of promoting and utilizing these assets to support its financial operations and initiatives, further advancing the Islamic finance industry.