The Central Bank of Nigeria has warned non-interest financial institutions operating in the country against governance and compliance failures that could threaten public confidence and financial stability within Nigeria’s expanding Islamic finance sector.
The warning was issued during the 2nd Annual Interactive Session between the CBN Financial Regulation Advisory Council of Experts (FRACE) and the Advisory Committees of Experts (ACEs) of Non-Interest Financial Institutions, held at the apex bank’s auditorium in Abuja.
Speaking through the Director of the Financial Policy and Regulation Department, Rita Sike, the Deputy Governor in charge of Financial System Stability, Philip Ikeazor, said the rapid growth of Nigeria’s non-interest banking industry had increased exposure to regulatory, governance, and operational risks.
CBN Names Risks
According to the statement released by the CBN on Monday, Ikeazor warned that the sector’s increasing size, sophistication, and interconnectedness had created vulnerabilities that require stronger oversight and proactive risk management.
“The industry faces unique risks, particularly non-compliance risk, governance challenges, operational vulnerabilities, and emerging technological risks,” the statement quoted him as saying.
He added that if such risks are not properly managed, they could undermine public confidence, weaken financial stability, and damage the credibility of the country’s non-interest finance ecosystem.
The CBN explained that the engagement formed part of broader efforts to strengthen Shariah governance, improve regulatory clarity, and reinforce risk management standards across the non-interest financial services industry.
Growth of Islamic Financing in Nigeria
Nigeria’s Islamic finance sector has grown steadily over the past decade, with non-interest banks, Sukuk issuances, Islamic fintech firms, and Shariah-compliant investment products gaining wider acceptance among consumers and investors.
The apex bank noted that non-interest financial institutions continue to play a vital role in deepening financial inclusion, supporting real sector financing, and expanding access to funding for micro, small, and medium-sized enterprises.
According to the CBN, the establishment of FRACE and the mandatory constitution of Advisory Committees of Experts across non-interest financial institutions were designed to institutionalise a harmonised Shariah governance framework within the industry.
The regulator stressed that sustained engagement between FRACE and the ACEs remained necessary to ensure that regulatory expectations are consistently interpreted and implemented across the sector.
“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,” Ikeazor stated.
In his remarks, the Deputy Chairman of FRACE, Bashir Umar, said the session was aimed at strengthening governance standards within the non-interest finance subsector while encouraging constructive collaboration between regulators and industry advisory bodies.
He also commended the CBN for reviving the interactive session, which was first introduced in 2014.
