Jaiz Bank Foresees Huge Potential for Sukuk Bonds in West Africa
Many West African countries and companies may fall back on Sukuk bonds to raise non-interest funds to finance infrastructural development and corporate growth plans, the Managing Director, Jaiz Bank Plc, Mr. Hassan Usman has said.
Usman, who spoke at a twoday national convention of the Moshood Abiola Polytechnic Abeokuta Muslim Alumni (MAPAMA) in Lagos, said the envisaged scramble for Sukuk issuance in the nearest future could make the non-interest capital market grow bigger and faster than its banking counterpart.
“This is due to the inherent linkage of Sukuk to an underlying asset. The IMF asserts that with Sukuk, African nations could tap into growing Islamic financial markets to meet infrastructure financing needs instead of using conventional financing from international finance institutions such as the World Bank or the African Development Bank or relying on borrowed Chinese funds,” Usman said.
According to him, non-interest banking (NIB) in West Africa has a lot of potential due to a number of positive indicators including the economic growth in many West African nations supported by improving fundamentals, growing domestic demand and stronger regional integration.
He added that with a population of about 329 million people, the emerging middleclass segment of the region is expected to boost demand for NIB retail banking, takaful and Islamic funds.
He noted that with financial literacy improving across the region, greater understanding of the benefits and dynamics of NIB products shall usher in greater up-take of the products and help to deepen financial inclusion.
“Most importantly, NIB’s growth in the region is heavily going to be influenced by its infrastructure deficit -mainly new airports, power plants, roads and railways and the urgent demand for creative and alternative approaches to funding the gap, which is common to all the countries without exception,” Usman said.
He pointed out that Islamic finance has a lot of opportunities for young professionals and even those in mid-career, noting that Islamic finance system is a complete universe or ecosystem that goes beyond Islamic banks to include other areas such as Islamic capital market which has Sukuk as its most popular instrument, Takaful or Islamic insurance, Islamic wealth management and Islamic private equity.
According to him, as the market for Islamic finance develops in Nigeria, each segment of the market will sprout out and branch out to provide potential career paths for young and middle-level professionals.
He, however, noted that harnessing the opportunities in the Islamic finance market might take some time because the ecosystem is currently narrow with only one fullfledged bank, one window operation, one capital market operator and two Takaful operators.