Fitch Ratings has projected significant growth in Nigeria’s Islamic finance sector from the second half of 2025 through 2026, citing fresh regulatory reforms and liquidity support measures introduced by the Central Bank of Nigeria (CBN).

Also, the global rating agency downgraded the long-term issuer default rating of the African Export-Import Bank (Afreximbank) to ‘BBB-’ from ‘BBB’, assigning a negative outlook that signals heightened credit concerns around the bank’s sovereign loan exposure and internal risk governance. The bank’s short-term rating was also lowered to ‘F3’ from ‘F2’.

Furthermore, the global credit rating agency estimated the Islamic finance industry’s size at $4 billion as of May 2025, with potential for further expansion.

The anticipated boom was anchored on renewed sovereign sukuk issuances and the rapid rise in Islamic banking assets, following the CBN’s rollout of new liquidity management tools tailored for non-interest financial institutions. These instruments included a master repurchase agreement, non-interest asset-backed securities, and non-interest notes designed to address a longstanding funding and investment gap for Islamic banks.

“The size of Nigeria’s Islamic finance industry was estimated to be around $4 billion by end-May 2025. Sukuk outstanding is the largest segment of the Islamic finance industry at 53.9 per cent, followed by Islamic banking assets at 45.2 per cent, and the rest includes takaful and sharia-compliant funds.”

It stated that non-interest banks’ assets recorded a growth of 110 per cent year-on-year as of end-2024, driven by a significant increase from deposits and loans, each more than doubling in value.

A new non-interest bank, Summit Bank Limited, was established in 2024. Despite this substantial growth, the market share in the country’s total banking assets only increased to a still small 1.7 per cent at end-2024 from 1.1 per cent end-2023.

Source: Arisetv