Micro, Small, and Medium Enterprises (MSMEs) are the backbone of many economies. However, they often struggle to access financing due to high interest. Hence, the Non-Interest Financial Institutions Association of Nigeria (NIFIAN) recently held its first 2024 webinar, themed “Leveraging noninterest finance to unlock sustainable financing for MSMEs”, with the bid to expose MSMEs to alternative finance and provide mutually benefitting business opportunities to the advantage of the Nigerian economy at large.

The webinar provided an avenue for MSMEs, financial institutions, policymakers and regulators, and Individuals interested in non-interest finance to interact on the industry principles and their applications. It was geared towards broadening the knowledge and perspectives of the attendees towards the unseen opportunities in the noninterest finance industry.

Mr Akeem Oyewale, CEO of Marble Capital Limited and Executive Member of NIFIAN, gave a fine presentation at the Webinar, articulately explaining the ethics of Islamic finance and the purpose those ethics were established to represent.  According to him, Global Islamic finance assets are fast growing. He quoted the asset to be currently around $ 2.2 Trillion yet expanding due to the acceptance of the industry globally.

Oyewale further agrees with the inevitable role of MSMEs in a nation, including but not limited to job creation in society. He exemplified this position with data of approximately 39.6 million MSMEs in Nigeria as of 2020 and currently contributing 46.31% to the Nigerian GDP, according to the report from the Small Medium Enterprise Development Agency (SMEDAN).

To foster an adhesive relationship between MSMEs and the noninterest finance industry, the CEO of Marble Capital Limited highlighted the following as non-interest financing products suitable for MSMEs.

• Murabaha: A cost-plus financing arrangement where the financier purchases goods and sells them to the MSME at a marked-up price, with payment deferred over time.

• Mudarabah: A partnership where one party provides capital, while the other party manages the business.
• Istisna: A contract for manufacturing goods where the financier provides financing to the MSME to produce specific goods, with payment made upon delivery.

• Ijarah: Leasing arrangement where the MSME leases assets or equipment from the financier for an agreed-upon period and rental payments.

According to him, the Islamic Banking Act, the Central Bank of Nigeria, National Shariah Board and MSME development agencies should support the development of non-interest finance for MSMEs.

He also alluded to the Regulatory framework’s potential to support the development of non-interest finance for MSMEs through stakeholder engagement platforms, policy alignment, advocacy awareness, and capacity building.

The financial expert believed Lack of Awareness, Limited Infrastructure, Regulatory Environment, Capacity Building, and Access to Funding are the challenges facing the use of non-interest finance products by MSMEs.

On the other hand, he listed the opportunities for scaling up the use of non-interest finance for MSMEs in Nigeria as growing demand, government support, market potential, innovation and technology, and capacity development.

He opined that collaboration between stakeholders can be used to leverage noninterest finance for sustainable MSME development through partnership, government support, industry associations, impact investors, and technology integration.

“Through strategic partnerships, supportive policies, and technological advancements, non-interest finance empowers MSMEs to thrive and fosters financial inclusion and economic resilience within communities. It is crucial to note that non-interest finance can play in driving sustainable development and promoting shared prosperity on a global scale, Akeem said.”

In his welcome address, the NIFIAN Vice President and Chief Executive of TrustArthur, Dr Basheer Oshodi, spoke about Maqasid Shariah as a way of life, protecting wealth and intellect, and how Islamic finance can structure compliance systems for MSMEs.

The well-attended webinar was moderated by Mrs. Bukola Akinyele-Yisau, Head of Branding and Communications at TrustArthur.