By Aduragbemi Omiyale
The Managing Director of the Securities and Exchange Commission (SEC), Mr. Lamido Yuguda, called for more innovative financial products to meet the needs of the pension sector in Nigeria to deepen the capital market and support the growth of the sector, especially in the uninteresting segment.
Mr. Yuguda made the call during a one-day seminar organized by the agency on the theme The uninteresting capital market imperative for the pension industry.
According to him, the segment of interest-free financing has great potential to promote the development of the capital market and the growth of the national economy as it is one of the most suitable for long-term infrastructure financing.
He described the pension industry as one of the fastest growing economies in the country with assets under management of 13 trillion naira at the end of September 2021, adding that of this staggering amount, less than 80 billion naira are invested in Sukuk, which represents just under one percent of total pension assets under management.
“This requires more innovative financial products to deepen our market and support the growth of the sector, especially in the uninteresting segment.
“We strongly believe that the capital market has a leading role to play in this regard by offering a variety of long-term investment products to meet the needs of the pension industry as well as other investors with a goal. similar.
“It is encouraging to note that the National Pensions Commission has taken concrete steps to improve the regulatory framework for the investment of pension funds in the interest-free capital market by introducing an operational framework for the fund without interest.
“This will undoubtedly provide an additional opportunity for retirement savings account holders and retirees to invest their savings in financial instruments aligned with their lean goals and objectives.
“Indeed, the operationalization of funds definitively accelerates the national financial inclusion program while increasing the amount of investable funds by freeing up untapped capital,” he said.
Mr Yuguda said that in September 2021, total assets stood at 7.79 billion naira, or about 0.059% of total pension assets under management, expressing hope that the fund’s assets will increase as a result of public awareness, education programs and capacity building of stakeholders. through seminars, workshops and programs like this one.
“The SEC, in realizing the potential of the uninteresting segment of the capital market, has a real avenue for providing long-term capital. segment through awareness raising, capacity building, revision of the regulatory framework and the development of irrelevant projects and services.
“I am pleased to report that a significant number of its strategic initiatives have been completed as several Sharia / Ethics funds have been registered by the SEC.
In addition, the SEC worked with the MO to provide a framework for the issuance of the first FGN Sukuk in 2017 and two more Sukuk issues followed.
“However, we believe that more work needs to be done on carrying out other critical initiatives not relevant to our capital market plan.
“At the SEC, we have been approached by a number of potential corporate issuers of scope and we have registered the first scope issuer, we know that a number of corporate issuers are interested in the Sukuk issue, but some of them noted would like clarification on Sukuk’s neutrality vis-à-vis corporate bonds.
“The increased offer of scopes will accelerate the development of the non-interest capital market because I am confident that the experts in non-interest financing gathered here today will attract the interest and attention of participants and improve their knowledge on the subject to eventually lead to the birth of promoters and takers of uninteresting capital market products, ”he added.
In a goodwill message, the Director General of the National Pensions Commission (PenCom), Ms. Aisha Dabir Umar, congratulated the SEC for organizing this webinar.
The head of PenCom, represented by the administration commissioner, Mr. Umar Farouk Aminu, recognized the collaborative efforts of the two agencies which have over the years established acceptable values and standards of good governance in their fund investments pension in the Nigerian capital market.
“As you may know, PenCom recently published a list of operational guidelines for interest-free funds. We are convinced that this singular act will promote financial inclusion in Nigeria, and in particular boost enrollment in the macro pension fund. It is my call that the industry practitioners gathered here will come up with practical measures to facilitate the release of interest-free instruments into the market. “
She said that PenCom remains committed to ensuring that all instruments meet this requirement before investing in pensions and praised the collaboration between PenCom and the SEC to deepen the capital market to introduce in a sustainable manner. uninteresting products.
In his remarks, the secretary general of the Islamic Financial Services Council, Dr Bello Danbatta, said that Islamic finance is a complementary system, adding that no system could 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 interest-free and interest-based finance,” he said.