Thursday, November 04,2021 / 09:40 AM /  by SEC Nigeria / Header Image Credit: Independent Newspaper

The Director-General of the Securitiesand Exchange Commission, Lamido Yuguda has stated that the Non-Interest financesegment holds great potentials in furthering the development of the capitalmarket and the growth of the Nation's economy.

The SEC DG who spoke at a one-dayWebinar with the theme "The Imperative of Non-Interest Capital Market forPension Industry, said this product has been judged as one of the mostappropriate for the funding of long-term infrastructure.

Yuguda said the event hosted by theSEC, is the first in a series and it is aimed and providing a conduciveplatform for knowledge and experience sharing among participants and toenlighten them on this way of investing and financing.

He said the pension industry is one ofthe fastest-growing sectors in the nation's economy with assets undermanagement of N13trn as at the end of September 2021 adding that of thisimpressive amount, less than N80bn is invested in Sukuk representing a littleless than 1% of total pension assets under management.

"This calls for more innovativefinancial products to deepen our market and sustain the growth in the industryespecially in the non-interest segment. We strongly believe that the capitalmarket has a leading role to play in this regard by providing a variety oflong-term investable products to service the needs of the pension industry aswell as other investors with similar focus.

"It is encouraging that thenational pension commission has taken concrete steps to improve the regulatoryframework for the investment of pension funds in the non-interest capitalmarket by the introduction of operational framework for the non-interest fund.

"This will no doubt provide anadditional opportunity for retirement savings account holders and retirees toinvest their savings in financial instruments that are aligned with their litegoals and objectives. Indeed, the operationalization of the funds definitelyaccelerates the national financial inclusion agenda while increasing thequantum of investible funds by unlocking the untapped capital.

Yuguda stated that as at September2021, the total assets stood at N7.79bn constituting about 0.059% of totalpension assets under management expressing the hope that the fund assets willgrow with robust public awareness, education programs, and capacity building ofstakeholders through seminars, workshops and programs such as this.

"The SEC in realization of thepotential of the noninterest segment of the capital market, has a veritableavenue for providing long-term capital launched its 10-year capital marketmasterplan with a very strong focus on the development of the non-interestcapital market segment through awareness creation, capacity building, review ofregulatory framework and development of non-interest projects and services.

"I am happy to report that asignificant number of its strategic initiatives have been achieved as severalsharia/ethical funds have been registered by the SEC. In addition, the SECcollaborated with the MO towards providing a framework for the issuance of thefirst FGN Sukuk in 2017 and two other issuances of Sukuk have followed.

However, we believe that more workstill needs to be directed towards achieving other critical initiatives ofnon-interest in our capital market plan.

'At SEC, we have been approached by anumber of potential corporate issuers of scope and we have registered the firstissuer of scope, we are aware that a number of corporate issuers are interestedin issuing Sukuk, but some of them have noted that they will like clarity onthe neutrality of the Sukuk vis-a-vis corporate bonds.

"The increased supply of scopewill hasten the development of the non-interest capital market because I amconfident that the non-interest finance experts gathered here today will invokethe interest and attention of participants and enhance their knowledge of thesubject to eventually lead to the birth of promoters and on takers ofnon-interest products of the capital market".

In a goodwill message, the Director-Generalof the National Pensions Commission, PenCom Haji Aisha Dabir Umar commended theSEC for organizing this webinar on the Imperative of non-interest capitalmarket products for the pension industry.

Represented by CommissionerAdministration, PenCom, Dr. Umar Farouk Aminu, the PenCom Boss acknowledgedwith appreciation, the collaborative efforts of Pencom and SEC which have overthe years laid acceptable values and good governance standards in theirinvestments of pension funds in the Nigerian capital market.

She said, "As you may be aware,Pencom, recently released a list of operational quidelines for non-interestfunds. It is our belief that this singular act will promote financial inclusionin Nigeria, and particularly drive enrolment in the macro pension fund. It ismy call that industry practitioners gathered here will come up with practicalmeasures to facilitate the issuance of non-interest instruments in themarket".

She stated that PenCom remainsresolute in ensuring that all instruments meet this requirement before pensioninvestment and commended the collaboration between PenCom and SEC towardsdeepening the capital market to sustainably introduce non-interest products.

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