By Aduragbemi Omiyale

The Director-General of the Securities and Exchange Commission (SEC), Mr Lamido Yuguda, has called for more innovative financial products to meet the needs of the pension industry in Nigeria so as to deepen the capital market and sustain the growth in the sector, especially in the non-interest segment.

Mr Yuguda made this call at a one-day seminar organised by the agency themed The Imperative of Non-Interest Capital Market for Pension Industry.

According to him, the non-interest finance segment holds great potentials in furthering the development of the capital market and the growth of the nation’s economy as it is one of the most appropriate for the funding of long-term infrastructure.

He described the pension industry as one of the fastest-growing in the nation’s economy with assets under management of N13 trillion as at the end of September 2021 adding that of this impressive amount, less than N80 billion is invested in Sukuk, representing a little less than one per cent of total pension assets under management.

“This calls for more innovative financial products to deepen our market and sustain the growth in the industry, especially in the non-interest segment.

“We strongly believe that the capital market has a leading role to play in this regard by providing a variety of long-term investable products to service the needs of the pension industry as well as other investors with a similar focus.

“It is encouraging that the national pension commission has taken concrete steps to improve the regulatory framework for the investment of pension funds in the non-interest capital market by the introduction of an operational framework for the non-interest fund.

“This will no doubt provide an additional opportunity for retirement savings account holders and retirees to invest their savings in financial instruments that are aligned with their lite goals and objectives.

“Indeed, the operationalization of the funds definitely accelerates the national financial inclusion agenda while increasing the quantum of investible funds by unlocking the untapped capital,” he said.

Mr Yuguda stated that as of September 2021, the total assets stood at N7.79 billion constituting about 0.059 per cent of total pension assets under management expressing the hope that the fund assets will grow with robust public awareness, education programs and capacity building of stakeholders through seminars, workshops and programs such as this.

“The SEC in the realisation of the potential of the noninterest segment of the capital market has a veritable avenue for providing long-term capital launched its 10-year capital market masterplan with a very strong focus on the development of the non-interest capital market segment through awareness creation, capacity building, review of regulatory framework and development of non-interest projects and services.

“I am happy to report that a significant number of its strategic initiatives have been achieved as several sharia/ethical funds have been registered by the SEC.

“In addition, the SEC collaborated with the MO towards providing a framework for the issuance of the first FGN Sukuk in 2017 and two other issuances of Sukuk have followed.

“However, we believe that more work still needs to be directed towards achieving other critical initiatives of non-interest in our capital market plan.

‘At SEC, we have been approached by a number of potential corporate issuers of scope and we have registered the first issuer of scope, we are aware that a number of corporate issuers are interested in issuing Sukuk, but some of them have noted that they will like clarity on the neutrality of the Sukuk vis-a-vis corporate bonds.

“The increased supply of scope will hasten the development of the non-interest capital market because I am confident that the non-interest finance experts gathered here today will invoke the interest and attention of participants and enhance their knowledge of the subject to eventually lead to the birth of promoters and on takers of non-interest products of the capital market,” he added.

In a goodwill message, the Director-General of the National Pensions Commission (PenCom) Ms Aisha Dabir Umar, commended the SEC for organising this webinar.

The PenCom chief, represented by the Commissioner Administration, Mr Umar Farouk Aminu, acknowledged the collaborative efforts of the two agencies which have over the years laid acceptable values and good governance standards in their investments of pension funds in the Nigerian capital market.

“As you may be aware, PenCom recently released a list of operational guidelines for non-interest funds. It is our belief that this singular act will promote financial inclusion in Nigeria, and particularly drive enrolment in the macro pension fund. It is my call that industry practitioners gathered here will come up with practical measures to facilitate the issuance of non-interest instruments in the market.”

She stated that PenCom remains resolute in ensuring that all instruments meet this requirement before pension investment and commended the collaboration between PenCom and SEC towards deepening the capital market to sustainably introduce non-interest products.

In his remarks, the Secretary-General of the Islamic Financial Services Board, Dr Bello Danbatta, said Islamic finance is a complementary system adding that no system would be able to develop without integrating it into its financial system.

“Sustainable finance is not complete without integrative finance and integrative finance is only possible when you have non-interest and interest-based finance,” he stated.