Shettima: Nigeria’s Islamic finance assets insignificant in global market

Vice President Kashim Shettima

Vice President Kashim Shettima says Nigeria’s fast-growing Islamic finance assets remain largely insignificant in the over $2 trillion Islamic finance global market.

Shettima said despite the huge potential of Islamic financing to drive a more competitive economy, Nigeria’s finance sector is lagging behind in adopting Islamic financing in its financial market.

He said this at the 6th African International Conference on Islamic Finance (AICIF) tagged: ‘Towards a Just Transition’ and organised by The Metropolitan Law Firm and The Metropolitan Skills in collaboration Africa Finance corporation, and Security Exchange Commission (SEC) on Tuesday.

The Vice President, who was represented by the Special Adviser to the President on Economic Matters, Tope Fasua, said: “We are committed to designing policies targeted at financial deepening and financial diversification for unlocking private sector financing.

“With global assets under management exceeding $2 trillion and the growing demand for alternative sources of financing, Islamic finance is central to both financial deepening and financial diversification in Nigeria.

“However, Nigeria’s fast-growing Islamic finance assets remain largely insignificant in the over $2 trillion Islamic finance global market, despite Nigeria’s demographic composition and increasing demand for alternative sources of finance such as Islamic finance.

“Hence, we will continue to explore Islamic finance tools such as Sukuk to tap into local and international investments.”

On his part, the former Emir of Kano, Muhammad Sanusi, while speaking on the theme of the event, “Towards a Just Transition”, said there was a need to switch to a sustainable, net-zero future.

Sanusi said: “Since the industrial revolution, fossil fuels have powered extraordinary growth and development, albeit with huge costs to our climate.

“As a direct result, we are today in a climate emergency. To avert catastrophe, there is the growing concern to radically switch to a sustainable, net-zero future.

“This transition needs to happen fast, but it also has to happen in a fair and inclusive way. If done right, the transition offers immense opportunities: a systems change in which all communities, workers, and countries are lifted up.”

Speaking at the event, the Convener and Conference Chairman, Ummahani Amin, said just transition requires the mobilisation of climate funds to vulnerable African countries facing harsh reality of climate change such as increasing mortality, human displacements, and migration, among other impacts.

Amin, who is the Founder of Metropolitan Law Firm, lamented that there are systemic structural deficiencies that continue to inhibit the just transition process in Africa.

She listed them ro include limited private sector participation, increasing debt vulnerability of the African countries, and lack of transparency and accountability in financial flows, among others.

The CEO of the Metropolitan Skills Limited noted that according to the African Development Bank Group, out of the $29.5 billion of climate finance flows to Africa in 2019/2020, about $9.4 billion or 32 per cent of the total was allocated to energy systems, including energy education and research, energy consumption and demand efficiency, energy policy, and administrative management or development of hydropower plants.

“This leaves up to $22.6 billion-$30.6 billion annually in the energy financing gap in Africa,” Amin said but stressed that “given its nature and with over $2 trillion in global assets, Islamic finance offers a sustainable financing system for delivering Africa’s just transition process”.

“First, Sukuk and Islamic finance lending are two financial products which can be used to deliver clean energy infrastructure and large-scale programmes in African countries, particularly to aid the promotion of natural gas as a transition fuel in countries that can access it. Sukuk presents low risks and guaranteed returns to investors,” she added.

The Star