Still Waiting For Islamic Banking

During his screening before the nation’s senate, Lamido Sanusi, the new Central Bank governor said of Islamic banking: “It is important we make sure that people don’t say they are offering Islamic banking while they are actually running conventional banking.

You need the knowledge of the modern banking and of Islamic banking in Malaysia, the Arab World, and Pakistan to be on the committee.

“The services would be available to Muslims and non-Muslims. It is not a religion, it is a product available to the public. If things are set in place, I would be in support”.

Islamic banking in Nigeria
The Central Bank of Nigeria (CBN) terms Islamic banking, “non-interest banking”. According to the CBN, a non-interest bank means a bank which transacts banking business, engages in trading, investments and commercial activities, as well as the provision of financial products and services, in accordance with the principles and rules of Islamic commercial jurisprudence.

Transactions and contracts under this type of banking are non-permissible if they involve “interest; uncertainty or ambiguity relating to the subject matter, terms or conditions; gambling; speculation; unjust enrichment; or exploitation/unfair trade practices.”

In March 2009, a framework for non-interest banking was released by the CBN. According to D.A.N Eke, the Acting Director of Banking Supervision at the CBN, “the objective of the framework is to provide minimum standards for the operation of non-interest banking in Nigeria while serving as an exposure for comments, suggestions and/or inputs by stakeholders”.

Banks not yet ready
Some conventional banks in Nigeria such as Fin Bank Plc, Bank PHB and some microfinance banks such as Integrated Microfinance bank offer Islamic banking products.

In the case of Integrated Microfinance Bank, Islamic banking products were introduced by the bank in mid 2008 and three products are now being offered - the Ijara, the Musharaka marana and the Musharaka Nasat. In each of these products, customers contribute funds and both the bank and the customer share in the profits from the product.

Yet, industry analysts do not think that things will be “in place” in the near future to provide an apt environment for the expansion of Islamic banking services in Nigeria. One bank official said to NEXT: “Most of the banks as we know are still trying to sort themselves out, working on maintaining a fair balance sheet and trying to keep ahead of the impact of losses staring them in the face.

It would be quite unrealistic to consider setting up a new establishment. This is because we cannot use our present funds. We have to raise fresh funds. If you go through the framework well, it states that the funds cannot be mixed, they are separate, because they are different entities.”