SEC Targets 25% of Islamic Capital Market Capitalization by 2025

The Securities and Exchange Commission (SEC) has said that it was working with stakeholders develop the non-interest segment of the capital market that is expected to contribute at least 25 percent of the overall market capitalization by 2025, with Sukuk contributing 15 percent of outstanding bond issuances.

The Director General of the SEC, Mr. Lamido Yuguda stated this at the 2021 African International Conference on Islamic Finance in Abuja yesterday with the theme “Infrastructure Financing, Sustainability, and the Future of African Markets 2.0”.

Mr. Yuguda assured that SEC would continue to encourage corporates to leverage on the Islamic Capital Market by providing and ensuring an attractive enabling environment.

Represented by the Executive Commissioner Corporate Services, SEC, Mr. Ibrahim Boyi said the Commission, Yuguda explained that said Islamic finance instruments are globally recognized as acceptable securities, with less Value-at-Risk due to their asset-based and project-tied investment features.

“Thus, it offers financial products that are safe, competitive and attractive. Many jurisdictions have realized the potentials in Islamic Finance and have positioned themselves to tap the potential benefit of such financing”, he added.

According to him, “It is noteworthy that since Islamic finance heavily relies on the Islamic Capital Market as an investable outlet, products such as Sukuk (Islamic Bond), Islamic REITs (I-REITS), Islamic Funds (I-Funds) and Exchange-mirrored Traded Funds (Islamic Equity Index) could all be offered for the purpose of financing infrastructure.

“Sukuk issuances are increasingly gaining significance as a veritable mode of infrastructure financing. Consequently, a number of countries in the Sub-Saharan region of the continent – Sudan, Gambia, Senegal, South Africa, Ivory Coast, Nigeria, Mali, and Togo- have issued sovereign Sukuks to finance infrastructure”.

He said in Nigeria, the SEC has implemented a number of reforms aimed at deepening the non-interest capital market.