Nigeria

2014 – a challenging year with opportunities for the insurance sector

Nigeria’s insurance industry showed significant signs of positive gains in 2014. The sector’s contribution to the GDP was still at 0.4 percent even though it could achieve no less than 10 percent annually if well developed. The low level has been largely due to low awareness, poor purchasing power of Nigerians, poor market drive and unexciting products from insurers as well as lack of government patronage of insurance. At the National Insurance Summit held in Abuja, in December 2014 the government announced that it has set a target of N1 trillion in the next three years, and N5 trillion gross written premiums for the insurance sector within the next 10 years.

Jaiz unveils non-interest products at Kano Fair

Jaiz Bank Plc has introduced some specific small and medium enterprise (SME) products to empower small-scale businesses and teeming customers in the grassroots. Unveiling its corporate products and services at the on-going 35th Kano International Trade Fair at the weekend, Jaiz Branch Manager, Mallam Mansur Imam pointed out that besides its conventional products like savings account (Mudaraba), lease and acquisition finance (Ijara-Wa-Iqtina) and corporate and trade financing (Murabaha), the SME was uniquely conceived to finance market driven products and encourage growth of local enterprise.

Propagating Islamic housing model

Muslims in Nigeria have canvassed a good government policy that would promote affordable housing for the citizenry.ome group of Muslim businessmen and other professionals who gathered at the 2014 National Conference organised by The Companion, in Ibadan recently, advised Muslim organizations to join hands in tackling their peculiar challenges and assist members to secure affordable shelters. The gathering resolved that Nigeria’s massive housing deficit may further degenerate until governments and real estate private developers turn their focus to mass housing as a sector priority rather than the present proliferation of luxury estates.

Nigeria Islamic finance hub dream fading on knowledge gap

Nigeria’s aim to be a hub for Islamic finance is failing to materialise as a shortage of skilled and knowledgeable operators and lack of products combine to slow the sector’s take-off. There are very few professionals, such as lawyers and accountants who are conversant with Islamic Finance. Moreover, liquidity management in the country's industry is also a big problem, due to a lack of products. In 2013, the Nigerian Securities and Exchange Commission (SEC) established a Non-Interest Capital Market 10-year Masterplan Committee, to develop strategies to foster the Sharia compliant sector. Although there has been some progress, activities in the sector are way below potential.

Growth of Islamic finance and critical role of lawyers (2)

No doubt, the CBN guidelines on non-interest finance have been long awaited due to the fast growing scale and demand for Islamic banking globally. However, there is a need for a more codified regulatory framework and guidelines by the Securities and Exchange Commission aimed at promoting future sukuk issuance and protecting investors’ interest. The regulatory framework should also provide for increased but regulated licensing requirements for Islamic fund managers, provisions for corporate governance, enhanced operational standards, enterprise-wide risk management, accounting, audit and disclosure requirements, advisory council of experts requirement, rendition of periodical regulatory return on Shariah compliance and prudential guidelines relating to fund reserve, liquidity ratio and provision for asset losses.

Jaiz Bank Commences Financing In Aviation Sector

Nigeria's Jaiz Bank Plc has financed an executive aircraft as part of its programmes to venture into the aviation sub sector. The aircraft, which has been delivered to the customer, Aviation Resource Service Limited, was financed under the bank’s Ijarah wa iqtina. Under this model, the bank and the Aviation Resource Service Limited are co-owners of the aircraft based on a partnership arrangement whereby ownership is gradually transferred to the customer as it pays down. The general manager of Aviation Resource Service Limited, Tanko Yakubu, said that the company was a little bit skeptical at the initial stage of their discussion with Jaiz Bank but were proven wrong.

Banks and Sustainability Principles Reporting

As part of efforts to ensure that the ecosystem was preserved, the Central Bank of Nigeria (CBN) about two years ago rolled out guidelines on the Nigerian Sustainable Banking Principles (NSBP). The central bank had directed that sustainability reporting would commence in June 2014 with the submission of the one-off report (first quarter) not later than July 7, 2014. The CBN also instrcted that the second quarter one-off report should be submitted to it, not later than October 7, 2014, while the third quarter report should reach the CBN not later than January 7, 2015. Nonetheless, there are indications that some banks are having challenge complying with the reporting template because they are required to implement a sustainable banking principles and the respective management approach.

Sukuk - Tool for Infrastructural Development in Nigeria

Considering the huge infrastructural deficit that faces Nigeria, and the challenges being faced by the Federal Government of Nigeria due to a decline in oil revenue, it has become imperative for State Governments and corporates to access alternative financing techniques to meet their capital development needs. The potentials for using sukuk as a tool for capital raising and infrastructural development in Nigeria are examined and discusses the recent sukuk issuance by the Osun State of Nigeria under the State’s N60 Billion Debt Issuance Programme.

Jaiz grows branches to 14

Jaiz Bank Plc has increased its branch network to fourteen with the opening of the Kano Kabuga branch within Bayero University. A statement from the Head, Corporate Communications of Jaiz Bank, Idris Salihu said more branches would come on board before the end of the year. Salihu also stated that the bank has raised its capital base from the initial N5 billion it started with in 2012 to over N11 billion and is currently working on increasing it by way of right issue. The Bank commenced operations with three branches in Abuja, Kaduna and Kano states in January, 2012 and soon added branches in Gombe, Maiduguri, Katsina and Gusau (Zamfara state), Bauchi. It has three branches in Abuja and four in Kano with the addition of Kabuga branch.

Osun’s Sukuk Bond: Why Aregbesola qualifies to be termed ‘a Genius’ in financial management

The Governor of Osun State in Nigeria, Rauf Aregbesola, introduced Sukuk Bond to fasttrack the state’s economic development. According to the issuing houses, Governor Aregbesola’s sukuk initiative was said to be the first Islamic bond in sub-Saharan Africa. Though the governor knows that Sukuk is Islamic in nomenclature, the Sukuk bond is a conventional bond and coordinated by the regular investors in the nation’s capital and money market. The N14. 4 billion sukuk (14. 75 percent) fixed return tranche 2 has 42 investors with Lotus Capital Limited as the leading issuing house and Augusto and co as the rating agent. The bond, which is being used to finance roads and school constructions across the state, is due in 2020.

Lotus Halal traded fund, expanding frontiers of capital market

Nigeria-based Lotus Capital Limited recently launched the first sharia compliant exchange traded fund in sub-Saharan Africa – the Lotus Halal Equity Exchange Traded Fund (“LHE ETF”), with a target of raising about N1.5 billion during the initial offer period. The offer opened August 15, 2014, and closes September 11, 2014. Subscription is at an indicative unit price approximately equal to 1/200th of the value of the NSE-Lotus Islamic Index (“NSE LII”) on the day preceding the subscription. The LHE ETF would be listed and traded on the Nigerian Stock Exchange (NSE) and will contribute to overall market capitalisation and the global exchange traded fund universe.

Investors fail to tap from bourgeoning ETF markets

The Nigerian Exchange Traded Funds (ETF) market has shown potential for growth, though many investors are yet to recognise its promise. In the less than four years since the market recorded its first entrants into the ETF space, there are three Exchange Traded products valued at N3.209 billion or 0.0178 percent of the total market capitalisation of the Nigerian Stock Exchange (NSE) as at August 6, 2014. Comparison of statutory charges (sell side) on equities against ETFs shows a difference of 0.5964 percent in favour of ETFs; while on the buy side, the charges are the same. On the sell side, charges to equities are 0.7050 percent, while ETFs are 0.1086 percent; on the buy side, the charges are same at 0.3750 percent.

Takaful Investment Considerations

A Takaful insurance operator is to strategically consider the maturity matching approach as an investment mechanism in dealing with liquidity issues of the business at hand. Moreover, the issue of distribution of surplus in Takaful comes only after fulfilling or meeting the Shariah obligation of helping participants who have become victims of various risk crystallization. The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) brought out a valid suggestions on adopting the principle of Iltizam bil Tabarru (pledge or commitment to donate). This gives the participants the ownership rights over the scheme while still having the firm commitment of mutual assistance (Ta’awuni) on the premise that a balance, if any, will be returned by the fund manager for distribution between the donating participants or owners of the fund in proportion to their initial contribution.

From central banker to Islamic king

Lamido Sanusi was crowned Muhammadu Sanusi II, the 14th Emir of Kano in June, taking over from Ado Abdullahi Bayero after his death. A grandson of the 11th Emir of Kano and prince in the royal family, Sanusi was Central Bank governor from 2009 to 2013, when President Goodluck Jonathan suspended him after he exposed massive corruption at the state oil firm. His first months have shown the major challenges he faces: a string of suicide bombings, carried out by women, forced him to cancel the traditional end of Ramadan celebrations called the Durbar. The Islamist Boko Haram insurgency is increasingly targeting Kano. Sanusi also faces possible civil unrest in Kano if Goodluck Jonathan, a Christian southerner seen by many northerners as divisive, wins another term in 2015 elections.

Expectation high as Lotus Halal traded fund lists on NSE

Hajara Adeola, managing director, Lotus Capital Limited, has spoken on the benefits of the forthcoming listing of first Sharia Compliant Equity Exchange Traded Fund, the Lotus Halal Equity Exchange Traded Fund (LHEETF) on the floor of the Nigerian Stock Exchange via an initial offer for subscription. he TLHE ETF will be very liquid, he said, since its units can be bought and sold any time on the Exchange. More so, investors who hold a minimum of 5,000,000 units of the LHE ETF can exit by exchanging their LHE ETF units for the relevant number of the Fund’s underlying shares. Investors can either subscribe via a cash subscription or via in-kind subscription by the delivery of the stocks of the constituent companies of the NSE- LII in exchange for units of the ETF.

Foundation Tasks FG on Non-interest Financing for MSME

The Maidah Foundation, a non-governmental organisation for muslim women entrepreneurs has urged the federal government to adopt a non-interest financing to boost micro small and medium enterprise (MSME) in the country. This is contained in a communique read to newsmen by the Secretary-General of the Foundation, Hajia Latifat Balogun, at its stakeholder forum in Abuja. The communique said the development had capacity to bring millions of unbanked Nigerians to the formal sector. The communique further said the foundation was prepared to support government efforts to formulate appropriate template for the adoption of the new finance regime. The objective of the foundation is to contribute towards the economic development of women entrepreneurs in the country.

Lotus Capital signs 100m units of Halal Equity Exchange Traded Fund

Following the receipt of the Securities and Exchange Commission clearance of the Offer Documents in respect of the proposed initial offer for subscription of 100 million units of the Lotus Halal Equity Exchange Traded Fund, Lotus Capital Limited has announced the successful hosting of the signing ceremony in respect of the proposed initial offer. The board of directors of the company and relevant professional parties, including Vetiva Capital Management Limited (issuing house to the offer), were present to execute the offer documents during the signing ceremony. Lotus Capital, upon receipt of final approval from the Securities and Exchange Commission, plans to launch the Lotus Halal Equity Exchange Traded Fund, an Exchange Traded Fund (“ETF”) based on the NSE Lotus Islamic Index.

Jaiz Bank Chairman Advocates Sharia-compliant Instruments For MSMEs

The chairman of the Board of Directors of Jaiz Bank Plc, Umaru Mutallab, has charged the Central Bank of Nigeria (CBN), and other regulatory authorities in the banking sector to urgently consider developing Sharia-compliant liquidity management instruments for non-interest Islamic banks to invest in. Moreover, the process needed to be expedited to create a level playing field for all the participants in the financial service sub-sector including micro, small and medium enterprises (MSMEs) that so badly needed non-interest loans for their businesses, he added. Meanwhile a communiqué issued by Maidah Foundation, a network of Nigerian Muslim women entrepreneurs, prayed the federal government to strengthen the role of Islamic organisations in the creation of funds for the Nigerian entrepreneurs.

Jaiz Bank Assets Grow By 141 Percent

Nigeria’s Jaiz Bank Plc has recorded a 141 percent increase in total assets, from N14 billion ($86 million) in 2012 to N34 billion ($209 million) at the end of the bank’s 2013 financial year. Customers’ deposits experienced a similar exponential surge to N21.9 billion ($134.3 million) - a 567 percent increase over the previous year. Last week, the bank announced that its social responsibility unit, Jaiz Foundation gave N10 million ($61,000) relief materials to victims of Boko Haram bombing in Borno State. Jaiz hopes to get a National operating license before the end of the year. Besides, the bank hopes to list on the Nigerian Stock Exchange in the next few years to avail more Nigerians the opportunity to invest in the bank.

Shareholders Approve Jaiz Bank's Bid for National Licence

Shareholders of Jaiz Bank Plc yesterday approved the bank's bid to get a national operating licence in order to establish its presence across the country. It also emerged that the bank has grown its assets base to N34 billion as at the end of its 2013 financial year. This represented an increase of 141 per cent compared to the N14 billion recorded in 2012. The bank hopes to acquire the National Operating License before the end of the third quarter, to enable it operate in all the 36 states of the federation. Chairman of the bank, Alhaji Umaru Abdul Mutallab, said that in no distant future, the company would be listed on the Nigerian Stock Exchange.

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