Asset manager One17 Capital plans to introduce Shariah compliant investment products over the next 12–18 months to capture opportunities the growing Nigerian Islamic finance market offers, Financial and Shariah Advisory Head Ismail Rufai told IFN Investor.
These offerings may include Shariah compliant mutual funds, Halal commodity funds and other need-based products. The company aims to develop its product portfolio, emphasizing competitive returns while adhering to Islamic finance principles.
One17 Capital, one of six Shariah compliant asset management firms in Nigeria, is maintaining a keen eye on Nigeria’s Islamic investment landscape, noting that of particular significance are sectors such as agriculture, real estate and SMEs. It further notes that investment funds, REITs and exchange-traded funds could be poised for further growth as regulators have issued guidelines to develop these asset classes. “We have observed that the Islamic investment landscape in Nigeria is developing dynamically, driven by progressive regulatory frameworks and a growing demand for Shariah compliant financial products.”
Ismail said the Central Bank of Nigeria, the Securities and Exchange Commission (SEC), the National Insurance Commission and the National Pension Commission have provided comprehensive guidelines and regulations that facilitate the operation and growth of Islamic financial institutions.
Noting that continuous improvement and regulations tailored to these instruments will enhance investor confidence and market depth, Ismail said regulatory updates and active engagement with industry stakeholders are crucial to align with international best practices and resolve emerging market needs.
With the operationalization of the RSA Fund VI, designed for active and retiree contributors who prefer their retirement savings to be invested in ethical, interest-free instruments, most pension fund administrators have actively invested in Shariah compliant instruments in their portfolios, said Ismail. In addition, an umbrella body, the Non-interest Financial Institution of Nigeria, protects and upholds the expansion of Islamic finance in Nigeria.
Nigeria has four fully-fledged Islamic banks, 14 SEC-registered mutual funds, a single real estate investment scheme and a series of sovereign, sub-sovereign and corporate Sukuk issuances.
Ismail observed that the corporate Sukuk market has potential as there are currently few offerings such as the NGN30 billion (US$20.02 million) Family Homes Sukuk I & II (2021 & 2023) for the construction of affordable homes in some states and the TAJBank NGN10 billion (US$6.67 million) Mudarabah Additional Tier 1 Sukuk in 2022 under a NGN100 billion (US$66.73 million) program.
“Sovereign Sukuk issuances have attracted substantial investor interest, underscoring their potential. However, corporate entities are yet to fully leverage on Sukuk as a financing tool. The regulatory framework supports corporate Sukuk issuance. Better awareness, market readiness and investor education are areas that require further development.” Nonetheless, Ismail said One17 Capital recognizes that there are still challenges in Nigeria’s Halal investment industry. Some steps in the right direction would be introducing public education campaigns while enhancing collaboration to strengthen partnerships between Islamic financial institutions to leverage resources and expertise.
