Nigeria’s Islamic finance trade is more likely to increase from the second half of 2025 by way of 2026 on the again of accelerating sovereign sukuk issuances and Islamic banking belongings, pushed by new paid-in capital necessities and regulatory strikes to develop the trade, Fitch Scores says.
After a two-year break, the Debt Administration Workplace (DMO) introduced that the Federal Authorities has efficiently recorded a complete of N2.205 trillion subscriptions by way of the Sovereign Sukuk since its debut in 2017, representing an oversubscription of 735%, demonstrating robust investor urge for food for sharia-compliant devices in Nigeria’s debt capital market.
Fitch said, “Nigeria has notable potential for Islamic finance, supported by having one of many largest Muslim populations globally and a major unbanked inhabitants. Nonetheless, Islamic finance within the nation remains to be anticipated to be considerably smaller than that of standard monetary establishments, with the trade going through key challenges, equivalent to lack of information, robust opposition from segments of the general public, restricted product availability and distribution channels, still-developing regulatory framework and restricted Islamic banks (non-interest banks).
“The scale of Nigeria’s Islamic finance trade was estimated to be round USD4 billion by end-Could 2025. Sukuk excellent is the most important phase of the Islamic finance trade at 53.9%, adopted by Islamic banking belongings at 45.2%, and the remaining contains takaful and sharia-compliant funds,” the score company famous.
In response to Fitch, non-interest banks’ belongings recorded a development of 110% year-o-year as of end-2024, pushed by a major enhance from deposits and loans, every greater than doubling in worth.
“As of 5M25, the sukuk in Nigeria (all in naira) have been USD2.2 billion excellent, a lower of 4% yoy, with their share of the nation’s debt capital market excellent at beneath 2%. Bond issuance (all currencies) in 2024 was virtually twice that in 2023, whereas it reached USD12 billion in 5M25 (5M24: USD18 billion). The absence of sukuk issuance by companies and monetary establishments displays the shortage of incentives and demand, extra issuance complexities, and a comparatively underdeveloped sukuk market,” Fitch said.
Extra insights
In 2024, the Central Bank of Nigeria introduced a major enhance in paid-in capital necessities (share capital plus share premium) for industrial, service provider, and non-interest banks.
Takaful in Nigeria continues to have lower than 1% of whole insurance coverage trade belongings as of end-2024.
In April 2025, Fitch upgraded Nigeria’s score to ‘B’ from ‘B-’, reflecting elevated confidence within the authorities’s broad dedication to coverage reforms initiated following the shift to orthodox financial insurance policies in June 2023.
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