Nigeria’s non-interest banking sector has expanded significantly, with total assets reaching N4.39 trillion and financing and advances rising to N1.43 trillion, highlighting growing demand for alternative financial products, the Central Bank of Nigeria (CBN) has disclosed.
CBN Deputy Governor, Financial System Stability, Lamido Yuguda, disclosed the figures on Monday at the maiden National Conference on Non-Interest Finance and Economic Development in Nigeria in Abuja.
The conference was organised by the Institute of Capital Market Studies, Nasarawa State University, Keffi.
Yuguda said non-interest banking had grown considerably since its introduction in Nigeria, expanding from a single full-fledged bank in 2012 to five non-interest banks and one non-interest banking window.
He said the expansion reflected the growing importance of non-interest finance to Nigeria’s financial system, particularly in promoting financial inclusion, mobilising savings and supporting productive economic activities.
According to him, non-interest finance could help attract ethical investments, unlock dormant savings and provide financial services to Nigerians who may be underserved by conventional banking products.
“As an alternative financing model, non-interest finance has developed into a broad ecosystem that mobilises long-term capital, supports productive sectors of the economy, and strengthens financial system resilience,” Yuguda said.
He added that principles such as asset-backed financing, risk-sharing, ethical investment, transparency and financial discipline were consistent with sustainable and responsible banking.
Yuguda noted that linking financing directly to productive assets could support investments in agriculture, manufacturing, housing, infrastructure, commerce and small businesses.
Sukuk Market Expands
The CBN deputy governor identified the expansion of Nigeria’s Sukuk market as one of the major achievements of non-interest finance in the country.
He said the Federal Government had raised N1.492 trillion through seven sovereign Sukuk issuances between 2017 and 2025.
According to him, the proceeds were used to construct, rehabilitate and dualise more than 124 roads and bridges spanning over 6,000 kilometres across Nigeria’s six geopolitical zones.
Yuguda said Sukuk financing had also expanded beyond the Federal Government, with state governments and private-sector institutions accessing the instrument to finance projects and strengthen their balance sheets.
He disclosed that Osun State raised N11.4 billion, while Lagos State raised N20 billion for education and transport infrastructure projects.
TAJBank Limited also raised N67.03 billion through two Mudarabah Sukuk issuances to strengthen its Tier-1 capital, while Family Homes Funds Limited raised N30 billion through two Sukuk issuances to support affordable housing projects.
Yuguda said Sukuk’s asset-backed structure promoted transparency by linking investors to tangible assets and ensuring that funds were deployed to identifiable projects.
He added that repeated oversubscription of sovereign, sub-national and corporate Sukuk offerings indicated strong investor confidence in the instrument.
Takaful, Pensions Gain Ground
Yuguda said non-interest finance had also expanded into the insurance industry through Takaful, with five operators active in Nigeria at the end of 2025.
The operators had a combined capital base of N4.74 billion and total assets of N96.28 billion, he said.
He described Takaful as a cooperative risk-sharing model in which participants pool resources to provide mutual support during adverse events.
According to him, the system could strengthen household resilience, support agricultural risk management, improve business continuity and deepen financial inclusion.
The deputy governor also noted that non-interest finance had gained a foothold in the pension sector following the introduction of Retirement Savings Account Fund VI by the National Pension Commission in 2021.
The fund provides contributors and retirees with a Shariah-compliant investment option, with investments permitted in sovereign and corporate Sukuk, infrastructure Sukuk, non-interest money market instruments and Shariah-compliant equities.
As of July 31, 2026, Fund VI had reached a net asset value of about N475.9 billion, comprising N446.14 billion in the Active Fund and N29.76 billion in the Retiree Fund.
Yuguda said the growth reflected increasing acceptance of ethical and non-interest financial products within Nigeria’s pension industry.
CBN Seeks Stronger Regulation
Despite the sector’s expansion, Yuguda stressed the need for effective regulation, sound governance and consumer protection to ensure that financial innovation did not create new risks.
He said the Financial Services Regulation Coordinating Committee had an important role to play in coordinating financial regulators, harmonising regulations, strengthening supervision and mitigating systemic risks.
The CBN official also called for the integration of standards developed by the Accounting and Auditing Organisation for Islamic Financial Institutions into the financial reporting practices of non-interest financial institutions.
He said this would improve transparency, accountability and comparability across the sector.
Yuguda urged industry stakeholders to strengthen governance and risk management while investing in technology, customer-focused services, public awareness and professional development.
He identified significant opportunities in financial technology, renewable energy, climate-resilient projects, entrepreneurship, job creation and agricultural value-chain financing.
He added that the sector could help Nigeria attract regional and international investors seeking ethical and alternative investment opportunities.
NSUK Backs Expansion
The Vice-Chancellor of Nasarawa State University, Keffi, Prof. Sa’adatu Hassan-Liman, described the conference as timely amid growing global interest in Islamic finance.
Hassan-Liman said non-interest finance had evolved from a peripheral segment into an increasingly significant component of the global financial system, attracting interest from both Muslim and non-Muslim economies.
She said instruments such as Sukuk, Takaful and Islamic banking could help Nigeria address challenges around financial inclusion, infrastructure financing, responsible investment and risk-sharing.
“We therefore need to explore every credible avenue through which our financial system can become more inclusive, resilient and capable of supporting broad-based economic development,” she said.
The vice-chancellor said Nigeria’s need for long-term capital, infrastructure funding, entrepreneurship support and productive investment made it necessary to explore diverse and credible financing models.
She said the establishment of the Institute of Capital Market Studies demonstrated the university’s commitment to developing new areas of knowledge and producing evidence-based solutions to challenges in Nigeria’s financial sector.
Hassan-Liman noted that the university was the first in Nigeria to establish a Department of Securities and Investment Management, which received full accreditation from the National Universities Commission.
She said the university subsequently established the Institute of Capital Market Studies, with its doctoral programmes designed to bring scholars and practitioners together to deepen research and knowledge in financial markets.
The vice-chancellor urged participants, particularly doctoral scholars, to translate discussions from the conference into practical recommendations capable of strengthening Nigeria’s financial system.
She commended the Director of the Institute of Capital Market Studies, Prof. Uche Uwaleke, the conference chairman and former vice-chancellor, Prof. M.A. Mainoma, and other participants for contributing to the success of the maiden conference.