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Nigerian Non-Interest Finance Market Valued at $2.9bn
For over a decade, the non-interest finance industry in Nigeria has grown from strength supported by a good demand for increased awareness, capacity building, and regulatory support.
According to Fitch Ratings’ recent report, the size of the Nigerian Islamic finance industry is estimated at USD2.9 billion at end-2022 with outstanding sukuk being the largest segment at 57%, followed by Islamic banks at 42% (total assets), and the remaining 1% between Islamic funds (total assets) and takaful (total contributions).
- 5 Banks- There are currently three full-fledged non-interest banks and two conventional banks operating non-interest windows
- 4 Insurance- Takaful (Non-Interest Insurance) firms operating in Nigeria are four now.
- 10 Asset Management- There are 10 SEC-registered mutual funds, up from 5 a year ago.
- 5 Sukuk- Federal government of Nigeria has issued five Sukuk since its inception in 2017. Sukuk issuance by the DMO is more than N700bn.
- Pension Funds-Since the operationalization of Fund VI, some of the largest PFAs have actively commenced investing in a non-interest instrument in their dedicated portfolios.
Without timely regulatory guidance and framework, the success recorded in non-interest finance would have been limited.
Since 2010 when the Central Bank of Nigeria issued the framework for non-interest banking, other financial and capital market regulators have expanded the frontiers to cover insurance, pension, capital markets, venture capital, and even fintech.
- SEC Non-Interest Capital Market Master Plan
- CBN Banking Regulations, ACEs and FRACE
- Capital Market Regulations
- Takaful Guidelines (NAICOM)
- Pension Regulations (PENCOM)
- Tax Neutrality
- Secondary Market Rules (NGX and FMDQ)
- Non-Interest Finance Institutions Association (NIFIAN)
Non-Interest finance has supported the Nigerian economy in several ways, including.
- Trading
- Investment and Commercial activities
- Provision of financial products and services without the conventional interest charges.
- SME Financing
- Housing (Ijara Product)
- Tax Neutrality
- Infrastructure (Sukuk Product for Road Rehabilitation)
- Financial Inclusion
- Social Finance (Using Zakat, Sadaqat, Qard Hassan, and Waqf for the needy)