SEC Partners IFC, AFDB to Boost Sukuk Bond Investment

The Securities and Exchange Commission (SEC) yesterday expressed plans to work with International Finance Corporate (IFC), African Development Bank (AfDB) for development of Sukuk bond investment.

Ms. Mary Uduk, SEC new Acting Director-General said that the commission would engage with IFC, AFDB, state governments and Federal Mortgage Bank to include Sukuk option in their capital investment plans.

Uduk disclosed this on the sidelines of the First Capital Market Committee 2018 news conference in Lagos.

Sukuk is common in Islamic finance and is the Arabic term for financial certificates. It is the equivalent of bonds, which are common in the western world since earning interest is not allowed in Islam.

Sukuk bonds are structured to fulfill Islamic law, which prohibits charging and paying interest. If a financial instrument complies with Islamic law, it can be categorised in accordance with its tradability and non-tradability in secondary markets.

“The next level of engagement was to work with national entities such as IFC and AFD, state governments and institutions like Federal Mortgage Bank , among others to include Sukuk option in their capital investment plans,” she said.

Uduk said that the commission would also partner Nigerian Mortgage Refinance Company on Sukuk bond to strengthen financial inclusion and for market growth and development.

She said that the technical committee on non-interest capital market reported that the first sovereign Sukuk bond was issued in 2017.

Uduk said that a total of 1,600 retail investors investing about N5 million in the instrument.

She said the capital market was moving toward electronic Initial Public Offering (IPO), noting that the Nigerian capital market was working to adopt the trend.

She said that IPO committee was set up on April 19 to work on modalities for issuance of e-IPOs in the country.

Uduk said that the committee comprised SEC, NSE, the Association of Stock broking Houses of Nigeria, Association of Issuing Houses of Nigerian, CSCS, Institute of Capital Market Registrars and Fund Managers Association, among others.

She said that the committee was given three weeks timeline to work out the modalities.

Uduk said that a number of stakeholders had indicated interest to issuance e-IPOs, noting tha, SEC would harmonise the reports and existing rules before its implementation.

She assured all investors and the capital market community that the new management would ensure continuity of existing policies, especially the Capital Market 10-year master-plan.

Uduk said that the new team would leverage on the existing strategies to boost investor confidence.

According to her, the team was committed to effective implementation of the capital market master-plan.

She, however, called on investors to desist from investing in unapproved instrument such as bitcoins to avoid loss of funds.