Lagos law firm Olaniwun Ajayi LP published its Islamic Finance Insight Report 2026 on 31 July 2026. It reviews Nigeria’s non-interest finance sector over the first and second quarters of the year, covering market transactions, regulatory standards and the global trends shaping the local market. Its central argument is that the sector is moving from expansion to execution.
What the report says
The firm describes strong momentum in the first half of 2026, with institutional participation rising even as global volatility and geopolitical tension tightened access to international hard-currency markets. It notes that the World Bank projects Nigeria’s economy to grow 3.7% in 2026 and expects the Islamic finance sector to do better, supported by ethical equities and capital market activity.
Other points from the summary:
- Bank recapitalisation: Jaiz Bank, TAJBank and Lotus Bank held up during the Central Bank of Nigeria’s recapitalisation programme.
- New entrants: the Bank of Industry plans to open a non-interest banking window.
- Wider use: activity is spreading beyond retail banking into industrial development and infrastructure financing.
- Halal economy: Nigeria’s National Halal Economy Strategy aims to capture a share of a global halal market the report puts at USD 7.7 trillion.
- Standards: regulators are working toward phased integration of AAOIFI standards.
How big the sector is
Nigeria’s Financial Reporting Council (FRC) estimates the non-interest finance sector at about ₦2.5 trillion. Non-interest finance has been part of the country’s financial system since 2011 and now includes licensed Islamic banks, takaful operators and sukuk. The FRC notes that sovereign sukuk have funded roads and bridges nationwide, that Islamic banks lend to small and medium-sized businesses, and that takaful has widened ethical insurance options.
Takaful and conventional insurance now separated
One of the most concrete changes this year came from the National Insurance Commission (NAICOM). From 1 January 2026, takaful operators may not enter co-insurance arrangements with conventional insurers, and conventional insurers may not co-insure with takaful operators. NAICOM said the rule protects the integrity of takaful as a Shariah-compliant model and sets “clear regulatory boundaries” between the two businesses. The ban does not cover retakaful placed with conventional reinsurers, which remains allowed until the domestic retakaful market has enough capacity.
Insurance recapitalisation
The wider insurance market also went through a capital reset under the Nigerian Insurance Industry Reform Act (NIIRA) 2025. The new minimums are ₦10 billion for life insurers, ₦15 billion for non-life, ₦25 billion for composite insurers and ₦35 billion for reinsurers. In a notice dated 31 July 2026, NAICOM said 43 insurance and reinsurance companies had met the requirements, with eight more under final verification. Takaful operators were not part of this exercise.
The regional picture in West Africa
Nigeria is not moving alone. From 20 to 22 January 2026, the West African Monetary Agency (WAMA) and the Islamic Financial Services Board ran a regional workshop for central bank staff across the ECOWAS region. It covered dedicated legal texts for Islamic banks, Shariah governance, risk management, capital adequacy and liquidity management.
Ghana has also built out its rulebook. The Bank of Ghana issued a guideline on the regulation and supervision of non-interest banking in December 2025, and the Securities and Exchange Commission has published the Securities Industry (Sukuk Issuance) Guidelines 2026.
What to watch next
- AAOIFI adoption in Nigeria: how quickly the phased integration of standards moves into reporting and supervision.
- Retakaful capacity: whether domestic capacity grows enough to reduce reliance on conventional reinsurers.
- New windows: the Bank of Industry’s non-interest window and any other entrants.
- Sukuk pipeline: further sovereign and sub-national issuance for infrastructure.
- Ghana’s first deals: the first sukuk issued under the new SEC guidelines.
Taken together, the report and this year’s regulatory moves show a Nigerian market that is past the start-up phase. The next stage will be judged less on licences and announcements and more on how well transactions are structured, governed and reported.
Related reading: Mordor Intelligence’s Islamic finance market forecast to 2031, key findings from the SGIE Report 2025/26 and Sri Lanka’s Islamic finance sector crossing one billion dollars in assets.
FAQ
Lagos law firm Olaniwun Ajayi LP, on 31 July 2026.
About 2.5 trillion naira, according to Nigeria’s Financial Reporting Council.
No. Since 1 January 2026, NAICOM has banned co-insurance between takaful operators and conventional insurers. Retakaful with conventional reinsurers is still allowed.
