Nigerian Islamic finance industry to continue growth on policy push

Nigerian Islamic finance industry to continue growth on policy push

Dubai: The Nigerian Islamic finance industry will continue its growth trajectory in 2023-2024 on the back of government sukuk issuance and policy push but is still likely to remain nascent in the medium term, says Fitch Ratings. Nigeria houses the largest sukuk market in Africa with an outstanding issuance of NGN755.5 billion (USD1.6 billion), albeit small by global comparison.

Islamic banking - referred to as non-interest banking in Nigeria - is also growing swiftly from a low base on the back of strong financing push (including from newly-established Islamic banks), a growing capital base, and government’s more lax prudential requirements compared with conventional banks’. Challenges include a limited Islamic banking footprint and low public awareness of Islamic products.

The size of the Nigerian Islamic finance industry is estimated at USD2.9 billion at end-2022, with outstanding sukuk being the largest segment at 57%, followed by Islamic banks at 42% (total assets), and the remaining 1% between Islamic funds (total assets) and takaful (total contributions). The long-term potential is significant as Nigeria has the largest Muslim population in Africa with a large unbanked population.

In 2022, the Federal Government of Nigeria issued seven-year sukuk raising NGN130 billion (USD282 million), its fifth issuance since 2017 with