Nigeria’s Vice President, Kashim Shettima, alongside the respected 14th Emir of Kano, Muhammadu Sanusi, is spearheading a powerful call for African nations to embrace Islamic finance. They believe this ethical financial system holds the key to unlocking inclusive growth and sustainable development across the continent. This isn’t just about banking; it’s about building economies that work for everyone, from the bustling cities to the remotest villages.
Key Takeaways:
- Vice President Shettima and Emir Sanusi are championing Islamic finance for Africa’s economic transformation.
- They emphasize its role in reaching the unbanked and empowering small-scale enterprises.
- Nigeria is set to formally integrate Islamic finance reporting standards, enhancing transparency and global comparability.
- Instruments like sukuk and takaful are already funding critical infrastructure and social initiatives in Nigeria.
- The push is for finance to serve humanity, ensuring wealth circulates to uplift communities.
Islamic Finance: A New Dawn for Africa?
At the 7th African International Conference on Islamic Finance (AICIF) in Lagos, the message was clear: Islamic finance isn’t just an alternative; it’s a vital tool for progress. Vice President Shettima, represented by his Special Adviser on Economic Affairs, Dr. Tope Fasua, highlighted that true progress means shared prosperity. He noted Nigeria’s impressive 400% growth in tax revenue and nearly doubled tax-to-GDP ratio, with resources now channeled into education, healthcare, and livelihoods. Initiatives like the Nigerian education loan fund and SME credit schemes are proof of this inclusive approach.
Shettima articulated that Islamic finance, with its inherent ethics, fairness, and social responsibility, provides a robust framework for this shared prosperity. He pointed to Nigeria’s successful use of instruments like sukuk, which have funded over 120 major road projects covering nearly 6,000 kilometers. Takaful insurance is extending protection to millions, and waqf endowments are supporting schools and hospitals. The Vice President stressed that Africa’s future should be financed from within, guided by principles of justice, inclusion, and sustainability.
Emir Sanusi’s Vision: Big Banks for the Bottom of the Pyramid
His Royal Highness, Muhammadu Sanusi, shared his strong desire to see Nigerian Islamic banks grow to the stature of giants like Access Bank or First Bank. He believes that true impact comes from ambitious institutions investing in capital that can reach the ‘bottom of the pyramid’ – those often left behind by traditional finance. With projections showing 85% of the world’s poor residing in Africa by 2050, and a significant portion in Nigeria, Sanusi urged Islamic Financial Institutions (IFIs) to actively create economies for small-scale individuals and lift them out of poverty. He pointed out that IFIs need to be present where the people are, not just in the big cities like Abuja or Lagos, as small enterprises employ a massive 70% of Nigeria’s population.
Regulatory Boost: Aligning with Global Standards
The Financial Reporting Council (FRC) of Nigeria, represented by its Executive Secretary, Dr. Rabiu Olowo, announced a significant step: the formal inclusion of Islamic finance services within Nigeria’s financial reporting framework. This will be achieved by adopting standards from the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). This move is crucial for ensuring that financial reporting for Islamic services is consistent, reliable, and globally comparable. Dr. Olowo clarified that AAOIFI standards complement the existing IFRS framework, addressing specific Shari’ah-compliant transactions that IFRS might not fully cover.
Benefits of AAOIFI Standards:
- Enhanced investor confidence
- Improved transparency
- Greater comparability for domestic and international stakeholders
- Specific guidance on Islamic finance contracts and instruments
The FRC is already building internal capacity and engaging with stakeholders, including banks, insurance operators, and scholars, to ensure a smooth and inclusive adoption process. A technical working group will also be formed to guide the implementation.
Infrastructure and Real Assets: The Power of Islamic Finance
Mr. Samaila Zubairu, President/CEO of the African Finance Corporation (AFC), emphasized that Islamic financing is particularly well-suited for championing inclusive growth because its core investments are in tangible, real assets like roads, power plants, and water infrastructure. He stated that constant access to electricity alone could significantly boost Nigeria’s economy. Islamic finance, being asset-backed, is perfectly positioned for infrastructure finance, as it is built on truth and tied to real, value-creating assets.
The Nigerian non-interest capital market has also seen remarkable growth, with sovereign sukuk raising over ₦1.4 trillion to fund critical road projects nationwide. The Securities and Exchange Commission (SEC) is committed to evolving regulatory frameworks for innovations like tokenisation and blockchain-enabled transparency.
Ultimately, the message from the AICIF is one of hope and tangible action. By embracing Islamic finance, Nigeria and other African nations are setting a course towards an economic future that is not only prosperous but also just, ethical, and inclusive for all its citizens.
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