Business Day Online

JAIZ Bank set to roll out nationwide, few months after CBN’s nod

Jaiz Bank has concluded plans to go national, few months after it received an approval-in-principle from the Central Bank of Nigeria (CBN) to extend its business nationwide. Authorities at the bank said additional branches would soon open in Lagos, Ibadan, Ilorin and Port Harcourt.

Legislation gaps slow Sukuk issuance in Nigeria, others – S&P

Legislation gaps are really challenging African countries’ intent to effectively issue the sukuk, which could help fund the continent’s huge infrastructure needs, Standard & Poor’s credit rating agency said on Thursday, in a new report. To date, African sovereigns have issued just about $1 billion of sukuk instruments, compared with global sukuk issuance of an average $100 billion per year over the past five years, says S&P. In Nigeria, Osun State has issued a N10 billion ($51m) sukuk yielding 14.75 percent, the first and currently the only Islamic bond from the Africa’s largest economy. S&P believes that regulations and fiscal incentives could speed Islamic Finance Development on the continent.

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.

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.

Saudi market surprise sparks speculation of Sukuk access

Saudi Arabia’s plan to open its $531 billion stock market to foreigners is prompting analysts’ speculation that Islamic bonds will be next. Saudi Arabia capital market authority said last week that the stock-market change would take place in the first half (H1) of next year. The move may lead to the country’s inclusion in MSCI indexes, which are used to measure performance by money managers with an estimated $9 trillion of assets. Opening the local-currency sukuk market would give foreign investors access to companies that sold 42 billion riyals ($11.2bn) through a dozen sales in the past year. However, access to the kingdom’s debt market may appeal more to investors wanting to broaden their exposure than to those seeking yield.

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.

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.

Indonesia central bank seeks primary dealer to build IILM sukuk market

Indonesia’s central bank hopes to attract a local bank to sign up as primary dealer for short-term sukuk issued by the International Islamic Liquidity Management Corp (IILM). Bank Indonesia is one of 10 shareholders in the Malaysia-based institution, but it still lacks a local dealer bank for IILM sukuk. IILM sukuk just got issued recently, with limited outstanding, its illiquid and does not have secondary market. Hence, IILM sukuk is not yet well known by Indonesia-based primary dealers. A domestic primary dealer could help address this problem, even though other dealer banks have an indirect presence in the country, such as CIMB Islamic, Maybank Islamic and Standard Chartered Bank. Moreover, it could help the central bank justify its $5 million shareholding in the IILM.

The exciting future of non-interest banking in Nigeria

Growth in the Muslim population throughout the emerging markets of Middle East and North Africa and Asia (MENA) is a key reason behind increasing demand for Islamic banking services. Especially sub-Saharan Africa offers growth opportunity for Shariah-compliant finance. Ja’iz Bank for example, Nigeria’s first Islamic bank, has witnessed growth in customer base, assets and branch network. The future of non-interest banking in Nigeria is bright. The Central Bank of Nigeria (CBN) has launched Liquidity Management Instruments to assist non-interest banks to be able to manage their liquidity while National Insurance Commission (NAICOM) has, in collaboration with Ja’iz, designed an Islamic cooperative kind of insurance called Takaful. Similarly, other institutions and commissions are mulling how to come up with non-interest-based bonds for financing infrastructure.

Nigeria’s Islamic banking dilemmas

Islamic banking and finance (IBF) is about to become part of the banking and finance landscape of Nigeria.

New Central Bank President in Nigeria appointed

Newly confirmed Central Bank Governor is Sanusi Lamido Sanusi.

Sanusi, 47, got his BSc degree in economics from Ahmadu Bello University (ABU) in 1981 and Masters Degree also in economics from the same institution in 1983.

He later read Sharia and Islamic Studies at the International University of Africa in Khartoum in 1991 and began his working career at ABU from 1983 to 1985 as a graduate assistant.

His banking career started when he joined Icon Ltd (Merchant Bankers) and later worked with UBA where he rose to the rank of general manager in 2005.

“What we need to do is open the interbank market, to improve the bank open position limits, to go back to wholesale debt auction, and to reverse the emergency measures that were taken, which were temporary, as quickly as possible,” Sanusi is quoted by the newspaper.

Syndicate content