The Central Bank of Nigeria (CBN) has said it would charge investors protection fees on its non-interest asset-backed securities.
In its recently issued draft framework of the CBN Non-Interest Asset Backed Securities (CNI-ABS), the regulator said it “shall charge Wakala fee,” which means protection, authorisation and delegation. “wakalah is a term in Islamic finance that denotes an agency contract, where one party appoints another to conduct a defined legal action on his behalf, for a specified fee or commission.”
The CBN intends to charge 10.00 per cent of the underlying return for one to 30 days investment; 7.50 per cent for 31 to 90 days; five per cent for 91 to 180 days; and 2.50 per cent for 181 to 365 days on persons or institutions interested in the CNI-ABS beginning from 2021.
Angela A. Ejembi, director of CBN’s financial markets unit, disclosed in the circular covering the draft framework that “the increased investments in Sukuk issued by multilateral organisations and the rising participation of non-interest financial institutions at the CBN windows has made it mandatory that the CNI-ABS to be operationalised.”