The Bank of Industry (BOI) has secured regulatory approval from the Central Bank of Nigeria (CBN) to operate a Non-Interest Banking (NIB) Window, a move aimed at expanding access to ethical and inclusive financing for underserved business segments.

The approval allows BOI to formally roll out non-interest banking products designed to support Nigeria’s industrial development, particularly for businesses that avoid conventional interest-based financing.

In a statement, BOI’s Divisional Head of Public Relations, Theodora Amechi, said the regulatory nod positions the bank to deepen its impact across the real economy by offering tailored financial solutions aligned with social and developmental objectives.

According to the bank, the Non-Interest Banking operations will promote inclusive growth, mobilise ethical funding, and support the financing of customer assets and raw materials using approved non-interest products.

“This approval authorises BOI to commence Non-Interest Banking operations, positioning the bank to further advance Nigeria’s sustainable and inclusive industrial development through tailored financial solutions for underserved and high-impact business segments,” the bank stated.

It added that the initiative would expand BOI’s reach to businesses that have traditionally been excluded from conventional credit channels, particularly faith-sensitive and ethically motivated enterprises.

Expanding Access to Ethical Financing

With the launch of the NIB Window, BOI said it would be able to finance customers’ assets and raw materials under non-interest structures, providing alternatives to interest-based loans while supporting productive economic activities.

The Managing Director and Chief Executive Officer of BOI, Dr Olasupo Olusi, described the approval as a major milestone in the bank’s transformation agenda.

“This licence marks a pivotal moment in the Bank’s journey of transforming Nigeria’s industrial sector. With this licence, we can reach a new category of borrowers who, before now, could not be served,” Olusi said.

He noted that the CBN’s approval reflects confidence in BOI’s commitment to responsible financing and would enable the institution to scale its operations, introduce innovative financing solutions, and deepen support for Micro, Small and Medium Enterprises (MSMEs).

Olusi added that the non-interest banking framework would open new opportunities for businesses facing challenges accessing traditional credit, allowing them to participate more confidently in the formal financial system.

Driving Inclusive Industrial Growth

BOI said the decision to commence non-interest banking operations is part of a broader strategy to drive inclusive economic growth and strengthen support for Nigeria’s real sector.

By mobilising ethical funding and aligning financing activities with developmental goals, the bank aims to enhance industrial productivity while catering to diverse financing preferences within the economy.

As Nigeria’s foremost Development Finance Institution, BOI plays a central role in funding the establishment and expansion of large, medium, small-scale, and micro enterprises across key sectors of the economy.

The institution was established in 1959 as the Investment Company of Nigeria (ICON), later reconstituted as the Nigerian Industrial Development Bank (NIDB) in 1964 under World Bank guidance. It assumed its current form in 2001 following the merger of the Nigerian Bank for Commerce and Industry (NBCI) and the National Economic Reconstruction Fund (NERFUND).

BOI’s primary mandate remains the provision of financial assistance to support industrial growth and inclusive economic development across Nigeria.

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BY: Laura Alakija and Mu’Awiya Yunusa

Sukuk Ijarah is one of the alternative instruments in Islamic finance which is frequently
offered around the world. It has also received encouraging…

Sukuk Ijarah is one of the alternative instruments in Islamic finance which is frequently
offered around the world. It has also received encouraging responses in the Nigerian
capital market. It is a means of raising funds and Sukuk Al-Ijarah provides an ethical, asset-backed financing model that can help close Nigeria’s 17–20 million housing deficitliquidity for economic growth.
This article examines how Sukuk Al-ijarah can be used to close the housing
infrastructure deficit in Nigeria.

The Concept of Sukuk Al-ijarah

Ijarah is lease financing form that may be applied to a particular asset. Upon maturity,
the lessor sells the asset to the lessee once all lease payments have been made. Like
other classes or types of Sukuk, Sukuk Ijarah bears a similarity to bonds.

For Sukuk Ijarah to be issued there has to be an underlying asset in which the Ijarah Sukuk
holder can hold equity.

Certificates of equal value are issued, representing a common share in the ownership of objects, usufructs or services in an investment project that are tradable in the secondary market.

Sukuk Ijarah is considered to be a flexible structure and can be used for multiple
financing needs. Various ijarah-based financing models or structures have been
proposed and implemented for different purposes around the world. Some of these
structures or models include:

ijarah muntahia bittamleek: Lease ending with the transfer of ownership. This is a
contemporary practice by Islamic financial institutions whereby it provides an option
to the customer to acquire the ownership of an asset with a low price at the end of a
specified period.

ijarah wa iqtina: Lease with acquisition. Ijarah wa iqtina is a lease together with a
promise by the lessee to purchase the asset at the end of the lease term. It is
therefore effectively very similar to a conventional finance lease or hire purchase
agreement.

Ijarah Mawsufah Fi Al-Zimmah: Forward Lease. This is an Islamic home loan based
on the concept of Forward Leasing, suitable to finance the purchase of property
which is under construction. Simply put, the monthly mortgage repayments are
considered as ‘rental’ until the final payment is made.

Al-ijarah thumma al-ba’i: Lease followed by sale. This is combination of two concepts
of Ijarah “leasing” and bay “buy.” The difference between this structure and ijarah
muntahia bittamleek is that under ijarah muntahia bittamleek, the lease agreement is
associated with the option (khiyar) to own the leased asset at the end of the lease
period while in ijara thumma bay’, the agreement incorporates the sale of the leased
asset at the end of the lease period.

The Structure of Sukuk Al-ijarah

The following six stages make up the structure of sukuk ijarah:
1. The Originator identifies the underlying project asset.
2. The originator transfers the underlying asset to the SPV to raise funds.
3. SPV issues sukuk, collect funds from investors and gives sukuk certificates to
the investors. Funds generated from the investors are made available to the
Originator.
4. SPV enters into a rental agreement with the originator for periodic repayment.
5. The rental amounts earned by SPV from the originator is distributed to the
investors.
6. At time of maturity, the SPV sells the underlying asset of Ijarah to originator
with agreed price to redeem the sukuk certificate
Sukuk Al-ijarah under the Nigerian Law

A. SEC Rules
The Rules were issued by SEC pursuant to its powers under Section 313 (6) of the
Investment and Securities Act, 2007 to regulate every sukuk issuer in Nigeria whether
government, private, indigenous or foreign entities so long as the entity is eligible to
issue sukuk.

Key terms under the SEC Rules

1. Sukuk Ijarah: The SEC rules describe Ijarah Sukuk as “certificates of equal
value which evidence undivided ownership on the leased asset and/or usufruct
and/or services and rights to the rental receivables from the said leased asset
and/or usufruct and/or services.”
2. Ijarah thummabai (lease to purchase): The Rules describe this class of Ijarah
Sukuk as “a contract which begins with an Ijarah contract to rent out a lessor’s
asset to a lessee. Consequently, at the end of the lease period, the lessee will
purchase the asset at an agreed price from the lessor by executing a purchase
contract.”
The Rules also permit issuance of forward leases with clear terms and conditions for
such a contract.

B. The Financial Markets Dealers Quotations (FMDQ) OTC Securities Exchange.
The SEC-registered self-regulatory over-the-counter securities exchange also issued
its listing rules for Sukuk in 2017 which provide detailed criteria and regulations for Alijarah Sukuk issuance among other classes of Sukuk. To be eligible for listing under
the FMDQ Listing Rules, the Ijarah Sukuk must meet the criteria outlined in Rules 1, 2,
3 and 4 of the Rules.

Development of Sukuk Al-Ijarah in Nigeria

Parallel to the increasing interest in the use of Islamic products globally, sukuk has
been identified as an alternative instrument for financing and investment. The most
commonly used and widely subscribed class of Sukuk is the Ijarah Sukuk. The first
Sukuk issuance in Nigeria was Al-ijarah Sukuk by the Osun State Government in 2013
which is also the first of its kind in sub-Sahara Africa.

The NGN60 Billion issuance was meant to fund the development of 20 High Schools, two middle level schools and two elementary schools in Osun State, Nigeria. Similarly, in 2016 the Federal Government of Nigeria (FGN) followed suit by issuing NGN100 billion sukuk ijarah for 25 road infrastructure projects throughout the federation.

The sukuk attracted an oversubscription of NGN105.9 billion, indicating investors’ desire and demand for sukuk. This first sukuk issued by FGN has raised a lot of enthusiasm resulting in two additional issuances by the FGN raising up to NGN362.5 billion through the three different issuances. Two sub-sovereign issuances were also made by Katsina State Government and most recently the Gombe State Government NGN 35billion Sukuk Alijarah. This means that the issuance of sukuk through concept of Ijarah is able to drive
the development of Islamic capital market industry in Nigeria and the country’s
infrastructure development.

Use of Ijarah Sukuk for Affordable Housing

Nigeria’s housing deficit is currently estimated to be between 17 to 20 million housing
units, the potential cost of overcoming the deficit is stated to be about NGN 6trillion.
The fact that Islamic Finance has a strong ethical focus and that so many of its core
contracts are asset-based makes property and infrastructure projects, particularly
those with a social element such as housing, very attractive to investors and
institutions.

The practical application of Ijarah Sukuk considered herein is the potential for its use
in the provision of low-cost home ownership. Malaysia, for example, has successfully
introduced and implemented Islamic Public-Private Housing Co-operative (IPHCM)
the model which is based on integration of the Ijarah Contract and other ethical
contracts. The IPHCM is a collaboration between public and private sectors.

The private sector construct low- and middle-income households whereas public sector
represents the Malaysian Federal Government and state governments.

Conclusion and Recommendation

Sukuk Al-ijarah is a competitive alternative that can be used to address the concerns
of affordable housing in Nigeria. The vast deficit in the housing sector can be closed
through the issuance of ethical financial instruments by the Federal Government or
the States. Joint venture agreements can be executed between the Federal Mortgage
Bank of Nigeria and the sub-sovereign states, with the states bearing 90% of the
equity contribution to be funded through Sukuk issuance particularly Al-ijarah Sukuk
because of its acceptability in the market.

Once the infrastructure is developed, sales from the units of houses will pay back the Sukuk with a surplus to the Government.

This funding method has indirectly made countries such as Singapore, UAE, Saudi
Arabia, Morocco, Egypt, Senegal, etc. hubs or centres that are capable of providing
profitable investment opportunities that are competitive for investors around the world.

Source: mondaq

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Nigeria’s newest non-interest financial institution, Summit Bank Limited, has officially commenced operations, pledging to deliver ethical, transparent, and inclusive banking services to Nigerians both at home and abroad.

At a press briefing in Abuja, the Managing Director and Chief Executive Officer, Dr. Sirajo Salisu, confirmed the development, stating that the bank is “live, well-regulated, fully operational, and ready to serve Nigerians with clarity, integrity, and purpose.”

According to the Central Bank of Nigeria (CBN), Summit Bank was licensed as a regional non-interest bank headquartered in Abuja.

Addressing speculations linking the bank to a tier-one financial institution, Dr. Salisu clarified that Summit Bank operates independently and has gone beyond the stage of speculation. He added that the curiosity and public interest in the bank show that Nigerians care about ethical finance.

Also speaking, the Executive Director and Chief Operating Officer, Dr. Mukhtar Adam, noted that Summit Bank’s leadership team comprises experienced executives from top Nigerian banks and digital innovators.

“While some of our directors have built accomplished careers in frontline institutions such as Zenith Bank, Summit Bank remains a fully independent entity governed by a professional board and compliant with CBN regulations,” Adam stated.

He explained that the bank’s mission is “to be a trusted partner providing ethical banking solutions that empower individuals and communities while making a positive impact in society.”

Summit Bank’s product portfolio includes Savings Account, Current Account, Mudarabah Term Deposit, and Domiciliary Account for personal banking. It also offers Corporate Current Account, Cost-Plus Products, Sukuk Investments, and Structured Investment Vehicles for SMEs and corporate clients.

Incorporated in July 2024 and licensed by the CBN in February 2025, Summit Bank said it will combine institutional banking experience with modern digital systems to make non-interest banking accessible to everyone.

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