Nigeria is moving to overhaul its financial reporting system with the adoption of global Islamic finance standards, a paradigm shift authorities say will boost transparency, investor confidence, and regulatory clarity in the non-interest finance sector.
The Financial Reporting Council of Nigeria (FRC) disclosed that the country will integrate Islamic finance benchmarks into the Nigerian Financial Reporting Framework (NFRF), aligning local practices with international best standards.
Speaking in Abuja, the Executive Secretary of the FRC, Dr. Rabiu Olowo, said the move follows the council’s decision to adopt the standards of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) for Islamic and non-interest financial institutions in Nigeria.
He explained that Islamic finance operates on principles fundamentally different from conventional banking, including interest prohibition, risk-sharing, asset-backed financing, and ethical investment, making specialised reporting standards essential.
“These differences make it important for us to coordinate closely with stakeholders to effectively integrate the standards and innovations of Islamic finance institutions,” Olowo said, adding that the framework would ensure financial reports faithfully reflect the substance of non-interest transactions, including governance and disclosure requirements.
According to him, “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.”
Olowo noted that Islamic finance is gaining global acceptance beyond traditional markets, pointing to the issuance of Sukuk and other non-interest instruments in countries such as the United Kingdom.
He stressed that the adoption is not intended to disrupt existing financial operations but to sharpen clarity, credibility, and regulatory certainty for institutions offering non-interest financial products.
Also speaking, Dr. Basheer Oshodi of the Non Interest Finance Institutions of Nigeria said the initiative is designed to deliberately build Islamic finance through clear guidelines, adding that “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.”
