By Chinwendu Obienyi and Chukwuma Umeorah
The Securities and Exchange Commission (SEC) has stated that the Non interest capital market has enormous potentials and capable of growing the market capitalisation by 25 per cent by the year 2025.
It’s Director General, Lamido Yuguda stated this during a meeting with the executives of Non Interest Financial Institutions Association of Nigeria in Abuja at the weekend.
Yuguda stated that the capital market master plan has a target that by the end of the plan period, 25 per cent of market capitalisation in the capital market should come from the Non interest sector.
“We are talking of trillions, that means that right now we are not really scratching the surface. Both the market and the Commission needs to do more. We are working on ensuring that we have a framework that looks at issues relating to non interest capital market and ensure we tackle them.
“There are lot of oppourtunities in the marke for non-interest products. The biggest players right now are the pension fund. PENCOM is interested that whatever product is there has some basic risk management features in them but I think there is a lot that we can do,” Yuguda said.
He noted that the SEC has tried to attract interest to the product by encouraging private issuers, show the potentials of the sukuk to other players in the market while adding that the sukuk is a simple and powerful product. Yuguda stated that Nigeria needs to adopt the normal sukuk forms where money is raised via sukuk, assets are built and then cash flows are generated from the assets which then flows back to the sukuk holders.
“That is the traditional way and that is what happened in countries like Malaysia. Malaysia has a lot of hotels and resorts and the key financing tool that they have used is the sukuk. They understand the power of this sukuk instrument. It’s a collateralised form of lending, the asset is built and it belongs to the people who have contributed money.
“You can see the cash flows coming back. These hotels are increasing in output in the economy in which it is located, people are working earning more incomes, the investors are happy because they are receiving the cash flows and the country is getting more prosperous as people from other parts of the world are going there to have a good life,” he said.