Nigeria: Expert Advocates Islamic Finance for Infrastructure, Project Financing

AllAfrica.com:THE Managing Director of Lotus Capital Limited, Mrs. Hajara Adeola, has stressed the need for government and other stakeholders in the country to finance the country's economic development, especially infrastructure development and project finance with the use of Islamic financial products as opposed to the conventional modes of financing.

Speaking during a forum in Lagos, Monday, to herald its forthcoming seminar tagged 'Islamic Finance: An alternative approach to project finance and infrastructural development', Adeola disclosed that the strategic design of Islamic financial products have made it attractive to financing the economic developmental needs of any society.

She noted that the conventional modes of financing are debt-based and are capable of further plunging the country into debts, thereby, defeating the development objectives of the government.

She said, "The Islamic financial model is more robust and attractive, especially in terms of providing financial stability and economic development. Most Infrastructure and project finance are debt based. This will further impoverish the country because of the huge burden of payment and high interest associated with lending. Islamic finance is like a partnership, where a project is identified and entered into by the fund. The identified project will be capable of generating revenue in the long run and the revenue will be used to recoup our investments and make returns to our investors."

She disclosed that its forthcoming seminar which is scheduled for January 15, 2009, in Lagos, is designed to sensitise operators of Islamic finance and other stakeholders in the nation's financial landscape on the immense potential and attractiveness of Islamic finance in infrastructure development.

"We are delighted to bring this special knowledge to Nigerians through international renowned facilitators, Professor Monzer Kahf and Neil Miller," she noted.

She further identified Islamic finance as a panacea to the global financial crisis and meltdown in the Nigeria's capital market, blaming the crisis for craze for wealth accumulation through issuance of debt instrument and high taste for interest bearing products.

Meanwhile, following the success recorded in the public offer of its Halal Inevstment Fund last year, Lotus Capital has announced its plans to list the fund on the Nigerian Stock Exchange (NSE) before the end of the first quarter of 2009.

Adeola disclosed that it is currently working out the modalities with the relevant regulatory authorities to ensure a successful listing.

She disclosed that its decision to float the funds was borne out of its track records and the need to create a financial product that caters for the need of the general investing populace, especially those concerned about their faith and ethical issues in investing.

She said, "Islamic finance has been identified as an attractive prospect in the global financial sector. It is designed to address faith and ethical considerations in investing. We decided to float the Halal Fund because of the successes we recorded in our general operations in 2006 and 2007."

She disclosed that the fund provides an alternative source to equity investment, providing investors with the opportunity to diversify their portfolio and invest in vehicles that are robust and provides stability, while conforming to faith and equity issues.

Going by the performance of the fund in the past years, she promised investors attractive returns on investment in the 2008 financial year, adding that the model of the fund made it immune to the crisis in the Nigerian capital market and the global financial crisis.

She noted that in the past financial years, the fund has outperformed the capital market indices, its previous performances and its competitors, posting impressive bottom lines and attracting more patronage from a wider majority of the populace - Moslems and non-Moslems alike.

According to her, "Islamic finance will provide an alternative to equity investment, providing investors the opportunity to diversify their investment portfolio. This is because of the attractiveness of the model which is more robust and stable.