The Federal Government (FG) issued its first sukuk (noninterest lease assets facilities) last week (on Thursday 14th September, 2017). Surprisingly, it will be available for only six days as it expires tomorrow, Wednesday 20th September.
Although we commend FG for this historical development, we are disturbed by the short notice of the savings window. The Central Bank of Nigeria (CBN) goofed by giving six days only as deadline when interest based bonds and shares are available for months before the closing date.
Six days notice is rather too short for a new facility. Afterall, Muslim Finance experts have for several decades been calling for noninterest financial instruments like the sukuk and FG needs to give this first chance a longer time until people get used to it.
Although it was advertised in one or two newspapers, FG needs to do better than that. A massive media publicity involving all media houses (print and electronic) is necessary for this first outing. CBN also needs to involve all banks. There is no sign at all that the banks are aware or that they are cooperating. With its battalion of experts, CBN should have known better. Or is the sukuk deliberately designed to fail? Is there an anti-Muslim sentiment behind this?
CBN should not only be made to keep the investment window open for at least 6 weeks, all agency banks should be directed to publicise the product throughout all their branches. In addition, CBN and the Federal Ministry of Information should be directed to give maximum possible publicity to the new facility. Nigeria needs this financial instrument as a new initiative to complement its efforts at emerging from the present economic quagmire.
The authoritative economic magazine, The Economist, once described Islamic finance as the tipping point. The London Stock Exchange listed its first ever sukuk ten years ago (April 2007). It has been a continuous exercise since then. Nobody should tell us that he is better in economic matters than the British and their shrewd banks. The Middle East and Asia are the two fastest-growing areas of the world in economic development and sukuk has been held largely responsible for this phenomenon.
The CIMB Group Holdings has affirmed that Islamic finance is the fastest growing section of the world’s financial system. Presently, Islamic banking is practiced in 300 different financial institutions in more than 52 countries including the United States and Britain. The involvement of Nigerian banks will give them the opportunity to bite their own mouthfuls from more than $822 billion in assets being managed by Islamic banks worldwide.
We expect CBN to know all these facts. It knows the advantages of sukuk and its preference in modern financial institutions. Or does it, really?
The Muslim Rights Concern (MURIC) urges Nigerian banks to avail themselves of this window. Sukuk is growing speedily in Western banks. Conventional banks are now scrambling to set up Shari’a-compliant operations in the Europe and America; a flurry of all-Islamic start-ups, from full-service investment banks to specialist advisory firms and their products have moved beyond lending, insurance and investment funds to include sukuk.
MURIC charges FG to extend the sukuk’s deadline to the end of December 31st, 2017. We suggest that a robust publicity should be embarked upon between now and the proposed December 31st ultimatum. No serious nation plays with its economic survival and diversification of investments is one of the best means for achieving this.