Economy
Islamic Finance Vital to Nation’s Economic Growth—Report
By Dipo Olowookere
A report jointly released by Thomson Reuters and the Islamic Corporation for the Development of the Private Sector (ICD) has stressed the role Islamic finance plays in the sustaining the growth of economy of a country.
Thomson Reuters is the world’s leading provider of intelligent information for businesses and professionals, while ICD is the private sector development arm of the Islamic Development Bank (IDB).
The key findings of the fifth edition of the Islamic Finance Development Report and Indicator (IFDI) were released at the World Islamic Banking conference (WIBC) 2017 held in Bahrain.
The report studied key trends across five indicators used to measure the development of the $2.2 trillion Islamic finance industry which are: Quantitative Development, Knowledge, Governance, Corporate Social Responsibility and Awareness. It also compiled extensive statistics on the industry from 131 countries and highlighted the best-performing countries within each key area of performance.
The IFDI global average value, which acts as a barometer of the overall industry’s development, recovered to 9.9 in 2017 from 8.8 in 2016. This reflected improved performances in each of the five indicators. Malaysia, Bahrain and the UAE lead the IFDI country rankings for the fifth consecutive year, while the GCC remains the leading regional hub for the industry.
Countries in the Commonwealth of Independent States (CIS), Europe, East and West Africa saw notable improvements in their IFDI values, demonstrating the continued growth of Islamic finance in non-core markets.
The report also highlights how Islamic finance can help countries adapt to difficult economic conditions.
Nadim Najjar, Managing Director of Thomson Reuters in the Middle East and North Africa, said: “We have seen that the Islamic finance industry can serve as a strategic tool for policymakers for sustainable growth in order to cope with the aftermath of the economic slowdown that impacted markets such as the Middle East.
“Some markets had noteworthy improvements in their IFDI values when they have improved or introduced Islamic finance to fit their economic needs and attract investments like Morocco, Tunisia and Iraq.”
Khaled Al Aboodi, CEO of ICD, said: “Incorporating Islamic finance in different strategies can be seen in the many steps taken by governments across different IFDI indicators. This was noticed when some authorities intervened in Islamic social funds management, raised literacy in the industry among potential market players through formal education systems, organized roadshows targeting potential market players, or built a roadmap to plot development of the overall industry.”
Islamic finance sector recovers strength and assets continue to grow
Quantitative Development, which measures the performance of Islamic financial institutions and capital markets, advanced the most of the five indicators as a partial recovery in oil prices helped Islamic financial institutions and mutual funds regain strength.
Sukuk grew least of the Islamic finance sectors as some large sovereign issuers resorted to conventional bonds to ease the issuance process and lower costs.
Yet even here, sukuk showed signs of promise as new players came to market and Saudi Arabia emerged as a new sovereign sukuk giant.
There was also an increase in consolidation within the industry. Mergers were agreed between Islamic financial institutions in the GCC, Pakistan, Indonesia and Malaysia that are likely to strengthen their competitive edge.
The reversion to strength after last year’s oil price-led downturn saw total Islamic finance industry assets rise 7 percent to $2.2 trillion in 2016 and it is expected that assets will continue to rise, to $3.8 trillion by 2022.
Governments looking to improve Islamic finance education and literacy
The Knowledge indicator, which encompasses education and research, also edged higher in the latest report.
There were 677 Islamic finance education providers in 2016, of which 191 provided a total of 322 Islamic finance degrees. Governments in Bahrain, Malaysia and Indonesia made particular efforts to push Islamic finance education and literacy.
Governments improving regulatory regimes to encourage industry
As governments sought to push Islamic finance to help revive economies hit by the fall in oil prices, Governance gained the most of the five indicators. Each of its Regulation, Shariah Governance and Corporate Governance sub-indicators showed improvement.
The number of Shariah scholars increased, and several countries began to push for external Shariah scholars and centralized Shariah boards. There were 44 countries in 2016 with specific Islamic finance regulations. Many of these pushed for takaful regulations or tax concessions for sukuk.
Corporate social responsibility another strong gainer, though disclosure still too low
The indicator for Corporate Social Responsibility (CSR) was another strong gainer, with improvements in both performance and disclosure by Islamic financial institutions.
The total CSR funds disbursed by different Islamic financial intuitions increased 18 percent over the year, to $683 million.
The number of institutions reporting CSR activities also increased, but the global average for reporting disclosure remains low. Despite this, there are developments that will contribute to a stronger CSR in the future including interventions in managing zakat, waqf and charity by the governments of the UAE, Malaysia and Indonesia.
Conferences and seminars exploring mutual values of Islamic and ethical finance
As governments turned their attention towards Islamic social financing, a growing number of conferences and seminars explored the common ground between Islamic and ethical finance, particularly in Europe. This helped the Awareness indicator to edge higher, despite a slowdown in growth of news articles on the industry.
Other popular themes of conferences and seminars included socially responsible investing, sukuk, and microfinance. The rise in number of Islamic microfinance events was particularly noticeable in Africa.
By Dipo Olowookere
The local stock market firmed up by 1.13 per cent on Friday as appetite for Nigerian stocks remained strong.
Investors reacted well to the 2026 budget presentation of President Bola Tinubu to the National Assembly yesterday, especially because of the more realistic crude oil benchmark of $64 per barrel compared with the ambitious $75 per barrel for 2025. This year, prices have been between $60 and $65 per barrel.
Business Post observed profit-taking in the commodity and energy sectors as they respectively shed 0.14 per cent and 0.03 per cent.
But, bargain-hunting in the others sustained the positive run, with the consumer goods index up by 3.82 per cent.
Further, the industrial goods space appreciated by 1.46 per cent, the banking counter improved by 0.08 per cent, and the insurance industry gained 0.04 per cent.
As a result, the All-Share Index (ASI) increased by 1,694.33 points to 152,057.38 points from 150,363.05 points and the market capitalisation chalked up N1.080 trillion to finish at N96.937 trillion compared with Thursday’s closing value of N95.857 trillion.
A total of 34 shares ended on the advancers’ chart, while 24 were on the laggards’ log, representing a positive market breadth index and bullish investor sentiment.
Austin Laz gained 10.00 per cent to close at N2.42, Union Dicon also jumped 10.00 per cent to N6.60, Tantalizers increased by 9.80 per cent to N2.69, Aluminium Extrusion improved by 9.78 per cent to N12.35, and Champion Breweries grew by 9.71 per cent to N16.95.
Conversely, Sovereign Trust Insurance dipped by 7.42 per cent to N3.87, Royal Exchange lost 6.84 per cent to trade at N1.77, Omatek slipped by 6.84 per cent to N1.09, Eunisell depreciated by 5.88 per cent to N80.00, and Eterna dropped 5.63 per cent to close at N28.50.
Yesterday, traders transacted 1.5 billion units worth N21.8 billion in 25,667 deals compared with the 839.8 million units sold for N32.8 billion in 23,211 deals in the preceding session, showing a surge in the trading volume by 76.61 per cent, an uptick in the number of deals by 10.58 per cent, and a shrink in the trading value by 33.54 per cent.
By Adedapo Adesanya
Three stocks stretched the bearish run of the NASD Over-the-Counter (OTC) Securities Exchange by 1.21 per cent on Friday, December 19, with the market capitalisation giving up N26.01 billion to close at N2.121 billion compared with the N2.147 trillion it ended a day earlier, and the NASD Unlisted Security Index (NSI) dropping 43.47 points to 3,546.41 points from 3,589.88 points.
The trio of FrieslandCampina Wamco Nigeria Plc, Central Securities Clearing System (CSCS) Plc, and NASD Plc overpowered the gains printed by four other securities.
FrieslandCampina Wamco Nigeria Plc lost N6.00 to sell at N54.00 per unit versus N60.00 per unit, NASD Plc shrank by N3.50 to N58.50 per share from N55.00 per share, and CSCS Plc depleted by N2.91 to N33.87 per unit from N36.78 per unit.
On the flip side, Air Liquide Plc gained N1.01 to close at N13.00 per share versus N11.99 per share, Golden Capital Plc appreciated by 70 Kobo to N7.68 per unit from N6.98 per unit, Geo-Fluids Plc added 39 Kobo to sell at N5.50 per share versus N5.11 per share, and IPWA Plc rose by 8 Kobo to 85 Kobo per unit from 77 Kobo per unit.
During the trading day, market participants traded 1.9 million securities versus the previous day’s 30.5 million securities showing a decline of 49.3 per cent. The value of trades went down by 64.3 per cent to N80.3 million from N225.1 million, but the number of deals jumped by 32.1 per cent to 37 deals from 28 deals.
Infrastructure Credit Guarantee Company (InfraCredit) Plc finished the session as the most active stock by value on a year-to-date basis with 5.8 billion units valued at N16.4 billion, followed by Okitipupa Plc with 178.9 million units transacted for N9.5 billion, and MRS Oil Plc with 36.1 million units traded for N4.9 billion.
The most active stock by volume on a year-to-date basis was still InfraCredit Plc with 5.8 billion units worth N16.4 billion, trailed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.7 million, and Impresit Bakolori Plc with 536.9 million units traded for N524.9 million.
By Adedapo Adesanya
It was not a good day for the Nigerian Naira at the two major foreign exchange (FX) market on Friday as it suffered a heavy loss against the United States Dollar at the close of transactions.
In the black market segment, the Naira weakened against its American counterpart yesterday by N10 to quote at N1,485/$1, in contrast to the N1,475/$1 it was traded a day earlier, and at the GTBank forex counter, it depreciated by N2 to settle at N1,467/$1 versus Thursday’s closing price of N1,465/$1.
In the Nigerian Autonomous Foreign Exchange Market (NAFEX) window, which is also the official market, the nation’s legal tender crashed against the greenback by N6.65 or 0.46 per cent to close at N1,464.49/$1 compared with the preceding session’s rate of N1,457.84/$1.
In the same vein, the local currency tumbled against the Euro in the spot market by N2.25 to sell for N1,714.63/€1 compared with the previous day’s N1,712.38/€1, but appreciated against the Pound Sterling by 73 Kobo to finish at N1,957.30/£1 compared with the N1,958.03/£1 it was traded in the preceding session.
The market continues to face seasonal pressure even as the Central Bank of Nigeria (CBN) is still conducting FX intervention sales, which have significantly reduced but not remove pressure from the Naira. Also, there seems to be reduced supply from exporters, foreign portfolio investors and non-bank corporate inflows.
President Bola Tinubu on Friday presented the government’s N58.47 trillion budget plan aimed at consolidating economic reforms and boosting growth.
The budget is based on a projected crude oil price of $64.85 a barrel and includes a target oil output of 1.84 million barrels a day. It also projects an exchange rate of N1,400 to the Dollar.
President Tinubu said inflation had plunged to an annual rate of 14.45 per cent in November from 24.23 per cent in March, while foreign reserves had surged to a seven-year high of $47 billion.
Meanwhile, the cryptocurrency market was dominated by the bulls but it continues to face increased pressure after million in liquidations in previous session over accelerating declines, with Dogecoin (DOGE) recovering 4.2 per cent to trade at $0.1309.
Further, Ripple (XRP) appreciated by 3.9 per cent to $1.90, Cardano (ADA) rose by 3.5 per cent to $0.3728, Solana (SOL) jumped by 3.4 per cent to $126.23, Ethereum (ETH) climbed by 2.9 per cent to $2,982.42, Binance Coin (BNB) gained 2.0 per cent to sell for $853.06, Bitcoin (BTC) improved by 1.7 per cent to $88,281.21, and Litecoin (LTC) soared by 1.2 per cent to $76.50, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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