‘Harnessing Islamic Financing Can Boost Nigerian Economy’

The development of the Islamic and Ethical Finance Industry within the capital markets is vital to economic empowerment as it provides funding for corporate financing and other capitalintensive projects. The Head, Debt Capital Markets, FBN Quest Merchant Bank Limited, Mr. Oluseun Olatidoye stated this at a forum in Lagos. He stressed that the opportunities within the Nigerian Islamic and ethical finance market must be harnessed, as ethical assets are gaining momentum as an alternative investment avenue both locally and internationally.

There has been an uptake in financial assets recently, especially with the Sukuk, both from Muslims and non-Muslims. These products have been oversubscribed and in some cases, there has been a challenge by financial institutions to meet the demand. For Muslims, Islamic and ethical finance is a more acceptable form of investment, as there are no interest charges on their investments which comply directly with the tenets of The Quran.

Olatidoye, therefore, encouraged value seeking Islamic and ethical investors to invest in the products offered, and for more financial services institutions, to issue more of these products.

Analysing the success of such asset classes in Nigeria, he said it is important to note that the Sukuk bond issued in the Nigerian market has been widely accepted, a case in point is Osun state- which was oversubscribed by about 11.4 per cent. The FGN Sukuk I and II have also seen between 5-30 per cent oversubscription, which means that the demand for ethical finance instruments is high.

“If properly harnessed, Islamic and ethical finance could be a key source of corporate financing, and capital raising for large projects such as funding for infrastructure development, development of the capital markets, and even foster increased financial inclusion - as more individuals who had not been a part of the capital markets investing community are slowly being introduced to, and are adopting Islamic and ethical finance services,” he said.