The Financial Reporting Council of Nigeria has announced plans to integrate global Islamic finance standards into the Nigerian Financial Reporting Framework as part of efforts to strengthen regulatory clarity and investor confidence.
The Executive Secretary of the council, Dr Rabiu Olowo, disclosed this in Abuja, noting that the move is designed to position Nigeria as a major hub for Islamic finance in Africa while ensuring transparency and accountability in non-interest financial reporting.
Olowo explained that the initiative follows the council’s decision last year to adopt the standards of the Accounting and Auditing Organisation for Islamic Financial Institutions for Islamic and non-interest financial institutions operating in the country.
According to him, Islamic finance operates on principles that differ significantly from conventional finance, particularly in areas such as interest prohibition, risk-sharing, asset-backed financing and ethical investments.
“These differences make it important for us to coordinate closely with stakeholders to effectively integrate the standards and innovations of Islamic finance institutions,” he said.
Olowo added that the proposed framework would ensure that financial reports accurately reflect the substance of non-interest transactions, including governance structures and disclosure requirements.
“Adopting the AAOIFI standards will enhance transparency, accountability, comparability and consistency in financial reporting across Nigeria’s non-interest finance sector, while strengthening market discipline and boosting investor confidence,” he stated.
He also noted that Islamic finance has continued to gain global acceptance beyond traditional markets, citing the issuance of Sukuk and other non-interest instruments in countries such as the United Kingdom.
The FRC boss clarified that the adoption of the standards is not intended to disrupt existing financial operations but to improve clarity, credibility and regulatory certainty for institutions offering non-interest financial products.
Speaking on the initiative, Dr Basheer Oshodi of the Non-Interest Finance Institutions of Nigeria said the move is aimed at deliberately building Islamic finance and establishing clear operational guidelines.
“More importantly, we won’t disrupt the financial reporting framework. We will enhance it and give it more potency, so that by the first quarter of this year, implementation should begin,” he said.
