Diversification of Islamic Financial Instruments

The key regulatory bodies in the Nigerian financial sector are the Central Bank of Nigeria, the

Nigerian Deposit Insurance Corporation, the National Insurance Commission, the Securities

and Exchange Commission and the Corporate Affairs Commission (CAC). The regulatory

bodies’ main objective is to promote and develop a sound financial system in Nigeria. It is in

the realization of this objective that the regulators made some significant achievements in the

promotion and development of Islamic Finance in the Country. These achievements include

the following:



Issuance of regulatory and supervisory frameworks for financial institutions offering

non-interest financial services between 2011 and 2016;



Issuance of guidelines for determining the liquidity status of

Sukuk



Setting up of Advisory Council of Experts (ACE)

– which is the Supervisory Shariah

Board – by the regulatory bodies;



Reduction in the liquidity ratio requirement from 30% to 10% for Islamic banks in view

of their peculiar liquidity management challenges;



Reduced minimum capital requirement for setting up Islamic banks; and



Development of liquidity management instruments for Islamic banks to ameliorate

their precarious liquidity challenge



Development of guidelines for the implementation of IFSB 15 & 16 for Islamic banks in

Nigeria

3.1.3 ISLAMIC BANKING IN NIGERIA

The performance of the segment as can be seen in the following table, remains dismal when

compared to the entire banking industry as the total assets, deposits and financing (credit) of

the segment according to the CBN’s FinA

(Financial Analysis) which stood at $230 million,

$164 million and $116 million as at December 2016, accounted for only 0.23%, 0.27% and

0.22%, respectively of the industry. Even though the performance was dismal, the growth rate

of the three indicators outperformed those of the conventional financial institutions as total

assets, deposits and financing grew by 29.4%, 26.6% and 39.2% as against 11.8%, 6.2% and

22% recorded by the conventional financial institutions in 2016, respectively.

This is the Shari’ah Supervisory Board (SSB). In Nigeria, in the regulatory agencies it is known as the Financial Regulation

Advisory Council of Experts (FRACE) while in the individual Islamic financial institutions it is known as Advisory Committee

of Experts (ACE)

Regulatory software for rendition of returns by Commercial Banks to the Central Bank of Nigeria on a daily basis