The Minister of State for Finance, Bashir Yuguda, has said that operators of all Islamic financial products must ensure that their operations comply with globally acceptable standards.
The minister, who was speaking at the inauguration of the National Insurance Commission’s Takaful Advisory Council in Abuja, noted that the directive became necessary as a result of the observation that non-compliance with Shariah has, in recent times, been ranked top among risks in Islamic finance under risk management and risk-based approach to financial service regulation.
According to the minister, the constitution of the Council, called the Advisory Council of Experts, was in line with the requirement that all Islamic financial service operators must have an in-house body to monitor and ensure sound Shariah compliant transactions for each registered business entity.
Coming at a time the country’s insurance industry is driving the growth and development of the society and economy of developing nations, the minister said the inauguration was the result of NAICOM’s resolve to key into the National Financial Inclusion Strategy launched by this administration in 2012.
He said the operational guidelines for the regulation of Takaful Insurance business in Nigeria by NAICOM heralds an important financial inclusion platform, in view of the fact that Shariah governance was an important feature that makes Islamic financial services easier for self-regulation.
Shariah governance in Islamic financial supervision, regulation and operation, he explained, was indispensable for the fulfillment of stakeholders’ expectations and the maintenance of confidence in the overall financial service system.
He said the expectation of the government was that the Council would further deepen insurance penetration and acceptance in Nigeria.
The minister said the role the advisory council for the NAICOM was to serve as an additional layer for addressing issues that may arise from Takaful operators’ regarding Shariah compliance in Takaful undertakings.
Highlighting the role of Shariah scholars in Islamic financial services, Mr. Yuguda explained that this required constant monitoring and review of rulings in the global Islamic financial industry.
Besides, he said this was necessary to ensure that trend towards harmonization and convergence of Shariah principles and on-going developments were followed on new products promoted by the international standard setting bodies.
Those international bodies include the Accounting and Auditing Organization for Islamic Financial Institutions, the General Council for Islamic Banks and Financial Institutions, both in Bahrain and the Islamic Financial Services Board, Malaysia.
He urged members of the Council to use their wealth of experience, knowledge and exposure towards the development of Islamic finance in the country.
Describing their role as advisory council for the Takaful regulator as sensitive, the minister said this required critical decision making to safeguard and advance public good for all stakeholders.
In his remarks, the Commissioner for Insurance, Fola Daniel, said the constitution of the Council by NAICOM is financial systems stability, FSS 2020 strategy and the National Financial Inclusion strategy to develop and strengthen the country’s financial markets.
To establish a framework for viable Takaful insurance sector, Mr. Daniel said the Takaful Insurance operational guidelines were spelt out in 2013.
He said the Council was established to advise and guide the Commission on all Shariah matters regarding the Takaful undertakings.
Members of the Council included Shittu Noibi as Chairman, with Bashir Aliyu, Abdulrazak Alaro, and Abubakar Sani as members.