Non-Interest Capital Market Committee Meeting August 2020 Update
Explore the recent developments and milestones of the Non-Interest Capital Market Committee Meeting in August 2020, including its objectives, achievements, and significant progress towards promoting non-interest capital market products like Sukuk for infrastructural development and financial inclusion.
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Presentation Transcript
CAPITAL MARKET COMMITTEE MEETING (AUGUST 2020) NON-INTEREST CAPITAL MARKET SUB- COMMITTEE Update
Background In June 2015, the Securities and Exchange Commission inaugurated this Committee to implement the 10 year Master Plan for the Non-interest capital market
Terms of Reference 01 Liaise with the National Pension Commission ( PENCOM ) on the inclusion of non-interest instruments as allowable instruments for pension fund assets. Consider other opportunities to actualize the Committee s objectives 03 02 04 Create awareness; sensitize potential issuers of the alternative approach Work with the Central Bank of Nigeria (CBN) on: the conferment of liquid asset status on capital products and the non-interest T-Bills, Bonds, CPs, BAs etc.. non-interest market issuance of
Terms of Reference The Committee set the following broad objectives: Identify ways of using Non-Interest capital market products e.g. (Sukuk) as a tool for financing infrastructural development Identify the regulatory issues that may impede the development of the non-interest capital market including tax, liquidity and pension investment Identify ways for using NICM as an instrument of financial inclusion and deepening the market
Major Milestones Through engagements with various stakeholders including the Debt Management Office, the Central Bank of Nigeria, the PENCOM, the FIRS, the NSE and the FMDQ, the following milestones have been recorded: SUKUK The First sovereign sukuk was issued in 2017 and two issuances have followed The Stock Exchanges created rules for listing of sukuk and all the sovereign sukuk have been listed A sukuk market is taking shape and yield curve has been established A flurry of activities have been created around the non-interest capital market as seen from the launching of new sharia compliant funds to piggy-back on the sukuk
Major Milestones PENCOM The PENCOM amended its rules to allow PFAs invest in sukuk and other non-interest instruments The PENCOM has amended its guidelines to allow creation of Fund VI which is a dedicated non-interest Retirement Savings Account PENCOM is in the implementation framework for the guidelines process of creating
Major Milestones CENTRAL BANK OF NIGERIA The Central Bank of Nigeria through the Financial Regulatory Council approved and issued certificate of sharia compliance to the 3 FGN sukuk The Central Bank of Nigeria granted liquidity status to the 3 sukuk FIRS The FIRS issued tax neutrality letter in respect of the sukuk The sukuk are thus treated in the same manner as a conventional FGN bond for tax purposes
Next Steps Continuous engagement with the Debt Management Office and other stakeholders to make Sukuk Issuance mainstream through for instance, release of an Issuance Calendar Continuous Engagement with Debt Management Office and the Central Bank of Nigeria on issuance of non-interest short term liquidity instruments Continuous engagement with the PENCOM on the release of implementation guidelines for Fund VI Continuous engagement with the FIRS on the release of tax circular for non-interest instruments Continuous engagement with credible corporates entities on the issuance of a corporate sukuk Creating awareness and education of non-interest instruments
