By Emmanuel Nduka Obisue
The Nigerian Government has announced plans to integrate Islamic finance accounting and auditing standards into the country’s financial reporting framework, in a move aimed at enhancing transparency, expanding financial inclusion, and strengthening the country’s position as a leading hub for non-interest finance in Africa.
The initiative was disclosed on Wednesday by the Financial Reporting Council of Nigeria (FRCN) during a stakeholders’ engagement held in Abuja, Nigeria’s capital.
The proposed standards were developed by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), a Bahrain-based body established in 1991, whose framework is widely adopted in countries with well-developed Islamic finance markets, including Saudi Arabia, Pakistan, Sudan, Indonesia, and several Gulf Cooperation Council (GCC) states.
AAOIFI standards are specifically designed to address the unique characteristics of non-interest financial transactions such as profit-and-loss sharing arrangements, sukuk (Islamic bonds), takaful (Islamic insurance), and other Shari’ah-compliant products that are often inadequately captured by conventional accounting frameworks.
Currently, Islamic finance institutions in Nigeria rely largely on traditional financial reporting systems, making adjustments to reflect Shari’ah-compliant operations. The planned integration is expected to bridge existing gaps, enhance credibility, and align Nigeria’s non-interest finance sector with global best practices while still complying with domestic regulatory requirements.
By adopting these standards, the Nigerian Government says it hopes to attract greater investment, deepen confidence in the financial system, and accelerate the growth of Islamic finance, which is increasingly viewed as a key driver of economic diversification and inclusive development.
