Mr. Lamido Yuguda, the Securities Exchange Commission’s (SEC) Director General has revealed that the pension industry will soon make significant investments in the non-interest (Islamic) capital market (NICM).
This, he claims, will be a game-changer, spurring more NICM product issuances by corporations and other types of issuers. Yuguda, who spoke at a virtual seminar on “Investor Protection and Transparency in Islamic Capital Markets” organized by the Islamic Financial Services Board (IFSB) and the Securities and Exchange Commission (SEC), also stated that the level of activity in Nigeria’s non-interest (Islamic) capital market attests to the investing public’s overwhelming acceptance of the market’s products.
He believes that the non-interest capital market has enormous potential in Nigeria, and that it has the potential to attract a large pool of untapped investors who are averse to conventional instruments, as well as existing investors looking to diversify their portfolio. According to Yuguda, the current level of activity in the non-interest (Islamic) capital market in the country confirms the overwhelming acceptance of such products by the investing public.
He stated that the market has recently seen the entry of institutions offering Islamic capital market products as well as issuances of the Federal Government of Nigeria (FGN) into the Sukuk market, with the most recent issuance of FGN SUKUK being oversubscribed by more than 400 percent.
The SEC DG stated that investor protection is the primary plank of regulation and transparency, a building block that promotes capital market growth, and that the knowledge gap that frequently exists between the market and investors must be bridged. Players and investors want more transparency. The risks that investors face necessitate a reasonable level of protection from the regulator to foster confidence and trust in the market.
In terms of NICM, he stated that the inclusion of two levels of Shariah review and certification is intended to serve as an additional safeguard for investors. This is in addition to the requirement for the shariah expert to be reviewed and certified on a continuous basis throughout the duration of the transaction.
According to him, non-interest financial activities are expanding at an exponential rate across all sectors of the Nigerian financial system.