The Financial Reporting Council of Nigeria (FRC) has announced that it is preparing to incorporate international Islamic finance standards into the Nigerian Financial Reporting Framework (NFRF).
The Executive Secretary of the FRC, Dr. Rabiu Olowo, revealed this initiative in Abuja on Wednesday, emphasizing that it seeks to bolster regulatory clarity and enhance investor protection. The initiative is also aimed at positioning Nigeria as a prominent hub for Islamic finance within Africa.
Dr. Olowo mentioned that the engagement with stakeholders comes after the FRC's declaration last year to embrace the standards set by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) for Islamic and non-interest financial institutions operating within the nation.
He elaborated that Islamic finance institutions function on principles that distinctly differ from traditional financial systems. Key differentiators include the prohibition of interest, risk-sharing, asset-backed financing, and ethical investment practices.
“These distinctions necessitate a close collaboration with stakeholders to successfully merge the standards and innovations associated with Islamic finance,” Olowo stated. He added that the new framework will ensure that financial reports accurately reflect the essence of non-interest transactions, covering governance and disclosure requirements.
He explained, “By adopting AAOIFI standards, we can enhance transparency, accountability, comparability, and consistency in financial reporting throughout Nigeria’s non-interest financial sector. This will further fortify market discipline and elevate investor confidence.”
Moreover, he noted the growing global acceptance of Islamic finance extending beyond its conventional markets, citing examples such as Sukuk and other non- interest financial instruments being issued in countries like the United Kingdom.
He made it clear that the integration of these standards is not intended to disrupt existing financial operations; instead, it aims to elevate clarity, credibility, and regulatory certainty for institutions providing non-interest financial products.
Dr. Basheer Oshodi from the Non Interest Finance Institutions of Nigeria added that this initiative aims to consciously develop Islamic finance and establish guidelines. He assured that “the existing financial reporting framework will not be disrupted; rather, it will be enhanced to make it more effective, with plans to commence implementation by the first quarter of this year.”
Comments (0)
You must be logged in to comment.
Be the first to comment on this article!