Islamic Finance in Nigeria Grows to $3.8bn Market
By Patience Ikpeme
The Islamic finance sector in Nigeria now represents 2-3 percent of the country’s financial market, with an estimated valuation of $3.8 billion, according to Mr. Olusegun Ayo Omosehin, Commissioner for Insurance, at the 2nd African Takaful and Non-Interest Finance Conference. He noted that this growth underscores a rising demand for Shariah-compliant financial services.
Breaking down the sector, Mr. Omosehin revealed that Sukuk bonds hold the largest share at 59.3 percent, followed by non-interest banks at 39.8 percent, while Islamic funds and Takaful insurance contribute 0.9 percent. The industry includes four non-interest banks, five Takaful companies, 15 microfinance institutions, and 10 non-bank financial institutions.
The National Insurance Commission (NAICOM), working with other regulators, is committed to expanding Shariah-compliant investment options to further support Takaful and other non-interest financial institutions, Mr. Omosehin said.
Highlighting Takaful’s distinctive role in Islamic finance, he explained it as a mutual insurance system grounded in cooperation and shared responsibility, different from conventional insurance models based on risk transfer and interest. “Takaful enables individuals to contribute to a shared fund that assists members in need, reinforcing community solidarity,” said Omosehin.
Since the introduction of Takaful Operational Guidelines in 2013, NAICOM has licensed five Takaful operators, a sector now accounting for 1-2 percent of Nigeria’s insurance market. With an average annual growth rate of over 34 percent in contributions over the past four years, Takaful’s future appears promising.
To support this growth, the Commission has introduced initiatives such as a risk-based capital system, lowering capital requirements for Takaful operators to encourage new entrants. NAICOM has also issued Market Conduct and Enterprise Risk Management Guidelines for Takaful and Retakaful operators to ensure best practices and effective risk management.
NAICOM has further engaged in public sensitization to raise awareness of Takaful and its benefits, collaborating with international bodies like the Islamic Financial Services Board and the Accounting and Auditing Organization for Islamic Financial Institutions to provide regulatory guidance, technical training, and industry support.
Through principles of risk mitigation, social justice, and sustainable development, Islamic finance and Takaful contribute to resilience, inclusivity, and ethical long-term growth in Nigeria.
