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From Adanna Nnamani, Abuja
The Central Bank of Nigeria has moved to strengthen governance standards and regulatory oversight in Nigeria’s non-interest financial sector amid growing concerns over compliance risks, operational vulnerabilities and the rapid expansion of Islamic fintech services.
At the 2nd Annual Interactive Session between the CBN Financial Regulation Advisory Council of Experts (FRACE) and Advisory Committees of Experts (ACE) of Non-Interest Financial Institutions held in Abuja, the apex bank said stronger governance frameworks had become critical to sustaining investor confidence, financial stability, and the credibility of the country’s expanding non-interest finance ecosystem.
Speaking at the session on behalf of the Deputy Governor, Financial System Stability, Mr. Philip Ikeazor, the Director of Financial Policy and Regulation Department, Dr. Rita Ijeoma Sike, described the engagement as a strategic platform for strengthening the resilience and soundness of the industry.
According to Ikeazor, the session builds on the foundation laid during the inaugural engagement and reflects the CBN’s commitment to promoting a “sound, credible and resilient non-interest financial system anchored on robust governance, effective compliance and prudent risk management.”
He noted that Non-Interest Financial Institutions (NIFIs) have continued to assume a more strategic role within Nigeria’s financial system by providing ethical and Shariah-compliant alternatives to conventional banking while supporting financial inclusion, real sector financing, MSME growth, and shared prosperity.
However, he warned that the increasing size and sophistication of the sector have also exposed operators to emerging threats capable of eroding public trust if left unchecked.
“The industry faces unique risks, particularly non-compliance risk, governance challenges, operational vulnerabilities, and emerging technological risks,” he stated.
He cautioned that such challenges, if poorly managed, could undermine financial stability and weaken confidence in the non-interest finance industry.
The Deputy Governor explained that the establishment of FRACE and the mandatory constitution of Advisory Committees of Experts in every NIFI were designed to institutionalise a harmonised governance framework across the industry and ensure uniform interpretation of Shariah principles.
“The objectives of today’s session include fostering the institutionalisation and effective operation of a robust Shariah governance system within Non-Interest Financial Institutions, and providing a structured platform for dialogue, knowledge-sharing and collaboration,” he added.
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In his remarks, the Deputy Chairman of FRACE, Prof. Bashir Aliyu Umar, said the engagement was aimed at deepening governance standards in the sub-sector while creating room for constructive engagement between regulators and operators. He commended the CBN management for reviving the interactive forum, which was first introduced in 2014, noting that sustained engagement had become increasingly necessary as the industry evolves.
Earlier, Dr. Sike reiterated the apex bank’s determination to sustain a strong and well-governed non-interest finance industry capable of supporting economic growth and innovation.
She pointed to the growing diversity of products and delivery channels within the sector, particularly the rise of Islamic fintech platforms, as evidence of the need for stronger regulatory oversight and continuous collaboration between regulators, scholars, and practitioners.
“The growing diversity of products, institutions, and delivery channels, particularly with the emergence of Islamic fintech, underscores the need for continuous dialogue, sound regulatory oversight, and robust advisory input from scholars and practitioners,” she said.
The session also featured technical presentations focusing on emerging industry risks and opportunities.
Prof. Bashir Aliyu Umar delivered a paper titled “Shariah Non-Compliance Risk in Non-Interest Banks and its Impact on the Non-Interest Financial Services Industry,” while Muhammad Kabir Muhammad and Mustapha Ishaq presented another paper on “Islamic Fintech and Financial Inclusion.”
Participants at the event engaged in extensive discussions on operational challenges facing the sub-sector, including governance independence, risk mitigation strategies, capacity building, and innovation management.
In his closing remarks, Prof. Abdul-Razzaq Alaro, a member of FRACE, urged stakeholders to move beyond discussions and implement the resolutions reached during the engagement.
He stressed that the true value of the session would be measured by the practical governance improvements achieved across the industry.
FRACE serves as the apex advisory body bridging conventional financial regulation and faith-based financial practices in Nigeria. The council supports the CBN in addressing complex regulatory and Shariah governance issues while promoting consistency, credibility, and investor confidence within the non-interest finance sector.
The event attracted members of FRACE, chairmen and members of ACEs, managing directors of non-interest banks, senior CBN officials, and representatives from institutions including the Bank of Industry and the Securities and Exchange Commission.
