A Professional Examination of the Legal and Regulatory Framework Governing Islamic Finance in Nigeria

Islamic finance has grown significantly in Nigeria following the Central Bank of Nigeria's 2013 non-interest banking framework, the issuance of sovereign and corporate sukuk, and the expansion of Jaiz Bank and other non-interest financial institutions, yet the legal infrastructure underpinning Islamic financial transactions remains institutionally and legislatively underdeveloped. This study provides a professional examination of the legal framework governing Islamic finance transactions in Nigeria, including non-interest banking regulation under BOFIA 2020, the Securities and Exchange Commission's trust deed framework for sukuk, NAICOM's takaful guidelines, and the Debt Management Office's sovereign sukuk programme. Data were gathered through interviews with 20 Islamic finance lawyers, Shariah advisory board members, and CBN officials, supplemented by analysis of five sukuk issuance prospectuses and the Jaiz Bank annual compliance reports from 2020 to 2023. Results indicate that the absence of a dedicated Islamic Finance Act creates reliance on conventional legal instruments that are incompatible with some Shariah finance structures. Tax treatment of Islamic finance instruments creates additional costs relative to conventional equivalents. Shariah supervisory board legal accountability standards are undefined. The study concludes that Nigeria requires a standalone Islamic Finance Act and preferential tax treatment for Shariah-compliant instruments to realise the sector's potential. Recommendations include a National Islamic Finance Development Board, standardised Islamic finance contract documentation developed with Accounting and Auditing Organisation for Islamic Financial Institutions guidance, and a qualifying Shariah advisor certification programme.

Keywords: Islamic finance, non-interest banking, sukuk, takaful, CBN non-interest framework