The Nigerian Exchange (NGX) Ltd and other stakeholders have advocated Islamic finance investments for economic recovery and development in Nigeria.

They made the call at the third edition of the Islamic Finance News Nigeria roadshow organised by the NGX on Wednesday in Lagos.

Temi Popoola, the Chief Executive Officer of NGX, said the Islamic Finance Development Report 2020 forecast that global Islamic finance assets would reach $3.69 trillion by 2024.

He explained, “The report attributed the strong growth in 2019 to the large issuance of Sukuk in the traditional Islamic finance market of Saudi-Arabia, Malaysia, Iran, and others.

“In Nigeria, the Islamic financial market continues to grow with increased interest from market participants and a growing number of players, including two Islamic banks.

“Following the devastating effects of the COVID-19 in the global economies, the Islamic finance industry has played a critical role in the global economic recovery.”

According to him, in 2020, the Islamic Development Bank raised $1.5 billion with its first Sukuk of sustainability designed to help recover COVID-19 in its member countries.

Mr Poppola added, “In Nigeria, Islamic finance presents an opportunity for both corporates and the government to raise capital for economic growth.

“I believe the discussions today will reveal steps to further mobilise ethical capital to solve Nigeria’s economic challenges.” 

The Islamic finance industry assets grew by 14 per cent in 2019, returning to their long-term pattern of strong growth after the slowdown in 2018 when the industry expanded by a moderate two per cent, he further disclosed.

Norfaselizan Rahman, the Managing Director of Taj Bank, said the Islamic finance market penetration was currently low but fast-growing.

Mr Rahman explained, “Islamic finance is known as a non-interest industry, we have a full set of players in a relatively new market and getting to know what Islamic market is all about.

“There will be some growth or learning curve in Nigeria with its own pattern of growth of Islamic finance development. The market penetration is low, but it is growing very fast.

“Going by the financial inclusion of government, the unbanked population are in the North and North-East specifically.” 

Similarly, Peter Mushangwe, an analyst at Financial Institutions Group (Moody’s Investors Service), said the Islamic finance industry was at its early.

Mr Mushangwe noted that Nigeria’s banking system was negative and bound to face more challenges if the gross domestic product figures, which showed slow growth in the non-oil sector, were anything to go by.

“It is the early stage of development, and the penetration is still very low and lower than one per cent of the GDP compared to other large Islamic systems. They are way larger than that.

“Also, the state of regulation is still developing and evolving in Nigeria, and from the Islamic finance perspective, we view it as a stage of development,” he said.

Elhadji Thiaw, Country Sales Specialist Senegal, Islamic Corporation for the Insurance of Investment and Export Credit, explained that the Muslim population globally were looking for ethical financing.

“We are the only multilateral institution globally that are providing Sharia-compliant risks and mitigation tools. As you might know, the Muslim population worldwide are in dire need of ethical finance, and we are having a key focus on Nigeria because it is a big player in the African continent,” said Thiaw.

He added, “Also, in the banking industry, Nigeria is playing a major role in terms of providing financial mechanisms that can help people to double up their businesses.

“We have a detrimental credit insurance policy which is a type of insurance that is supporting banks to have enough capacity in the international market.”