CBN, FRACE Move to Enhance Risk Management in Non-Interest Finance Sector

Oru Leonard

The Central Bank of Nigeria has reaffirmed its commitment to strengthening Shariah governance, regulatory clarity, and risk management within Nigeria’s non-interest financial services industry as part of efforts to sustain public confidence, financial stability, and orderly growth in the sector.

The commitment was reiterated during the 2nd Annual Interactive Session between the CBN Financial Regulation Advisory Council of Experts (FRACE) and the Advisory Committees of Experts (ACE) of Non-Interest Financial Institutions, held on Thursday, May 7, 2026, at the CBN Auditorium in Abuja.
Speaking on behalf of the Deputy Governor, Financial System Stability, Mr. Philip Ikeazor, the Director of Financial Policy and Regulation Department, Dr. Rita Ijeoma Sike, described the engagement as a strategic platform aimed at deepening the credibility, resilience, and soundness of the non-interest financial services industry.

According to Ikeazor, the interactive session builds on the foundation established during the inaugural engagement and reinforces the apex bank’s commitment to sustaining a sound and credible non-interest financial system anchored on strong governance, effective compliance, and prudent risk management.

He noted that Non-Interest Financial Institutions (NIFIs), have continued to play an increasingly strategic role in Nigeria’s financial system by providing ethical and Shariah-compliant alternatives to conventional finance while supporting financial inclusion, MSME development, real sector financing, and shared prosperity.

The Deputy Governor, however, warned that as the industry expands in size and sophistication, it is increasingly exposed to risks including governance challenges, operational vulnerabilities, non-compliance issues, and emerging technological threats.

He stressed that failure to effectively manage such risks could undermine public confidence, financial stability, and the credibility of the non-interest financial ecosystem.

Ikeazor explained that the establishment of FRACE and the mandatory constitution of ACEs across all NIFIs were designed to institutionalise a harmonised and resilient governance framework within the industry.
“The objectives of today’s session include fostering the institutionalisation and effective operation of a robust Shariah governance system within Non-Interest Financial Institutions, and providing a structured platform for dialogue, knowledge-sharing, and collaboration,” he stated.

In his remarks, the Deputy Chairman of FRACE, Prof. Bashir Aliyu Umar, said the session was designed to strengthen governance within the subsector and encourage constructive engagement between FRACE and the ACEs of NIFIs.

He commended the CBN management for reviving the interactive session, which was first introduced in 2014.

Also speaking, Dr. Sike reaffirmed the Bank’s commitment to promoting a strong and well-governed non-interest financial services industry, noting that the emergence of Islamic fintech and the increasing diversity of products and delivery channels underscore the need for continuous dialogue, sound regulatory oversight, and robust advisory input from scholars and practitioners.

The event featured technical presentations including one delivered by Prof. Bashir Aliyu Umar titled “Shariah Non-Compliance Risk in Non-Interest Banks and its Impact on the Non-Interest Financial Services Industry.”

Another presentation on “Islamic Fintech and Financial Inclusion” was jointly delivered by Muhammad Kabir Muhammad and Mustapha Ishaq.
A major highlight of the programme was an interactive session between FRACE and ACE members, where participants discussed practical challenges facing the industry, capacity building, independence of ACEs, governance enhancement, innovation, and strategies for mitigating risks within the sector.

In his closing remarks, Prof. Abdul-Razzaq Alaro commended participants for their active engagement and urged stakeholders to implement the resolutions reached during the session.

The meeting brought together members of FRACE, Chairmen and members of various ACEs, Managing Directors of Non-Interest Banks, senior CBN officials, and representatives of the Bank of Industry and the Securities and Exchange Commission, among other stakeholders.