ICYMI: Nigeria to integrate global Islamic finance standards into financial reporting
By Sabiu Abdullahi
The Financial Reporting Council of Nigeria (FRC) has announced plans to incorporate international Islamic finance standards into the Nigerian Financial Reporting Framework (NFRF).
Executive Secretary of the FRC, Dr. Rabiu Olowo, disclosed this development in Abuja on Wednesday, explaining that the initiative seeks to strengthen regulatory clarity, protect investors, and position Nigeria as a leading hub for Islamic finance in Africa.
Dr. Olowo stated that the engagement with stakeholders follows last year’s decision to adopt the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) standards for both Islamic and non-interest financial institutions operating in Nigeria.
He emphasized the differences between Islamic and conventional finance systems, particularly in areas such as interest prohibition, risk-sharing, asset-backed financing, and ethical investment. According to Olowo:
“These differences make it important for us to coordinate closely with stakeholders to effectively integrate the standards and innovations of Islamic finance institutions.”
He added that the updated framework will ensure that financial reports accurately reflect the substance of non-interest transactions, including governance and disclosure requirements. Olowo said:
“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.”
Citing the global growth of Islamic finance, Olowo noted examples such as the issuance of Sukuk and other non-interest instruments in countries like the United Kingdom, highlighting the expanding acceptance of these financial models beyond traditional markets.
He clarified that the adoption of these standards is not intended to disrupt existing financial operations, but rather to improve clarity, credibility, and regulatory certainty for institutions offering non-interest financial products.
Dr. Basheer Oshodi, representing the Non-Interest Finance Institutions of Nigeria, explained that the initiative aims to build Islamic finance deliberately and set clear guidelines. He added:
“More importantly we won’t disrupt the financial reporting framework, but we will enhance it and give it more potency so that by Q1 this year we should start implementing.”
This move is expected to strengthen Nigeria’s non-interest finance sector and provide investors with greater confidence in the country’s financial reporting standards.