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Nigeria: Between Islamic banking and Religion 0

In Nigeria, religion like ethnicity plays important roles. Changes and reforms are constantly resisted if they is viewed as having religious connotation, irrespective of their benefits to the society.

Religion in Nigeria is not only the opium of the people if looked at from the perspective of the Germany philosopher, Karl Marx, but it is also a source of fear to many, according to the treaty of Jeremy Bentham, an English philosopher.

Such fear is now crowding the presumed benefits the proposed Islamic banking is expected to provide in Nigeria.

The concept of Islamic banking is not new in Nigeria, however, this is the first time a governor of Central Bank of Nigeria (CBN) is vigorously pursuing its implementation.

Before Sanusi Lamido Sanusi became the governor of CBN in 2009, Islamic banking/non interest banking was approved by the CBN during the tenure of Professor Chukwuma C. Soludo.

There is a provision for non-interest banking in the BOFIA Act 1991 as amended. Sections 9, 23 and 52 provided for the establishment of Islamic banking in Nigeria. As a result of this provision, the former Habib Bank was given an approval in 1992 to operate a window of Islamic banking, which is still operational with Bank PHB.

The approval by the CBN under Professor Soludo saw the emergence of the proposed JA’IZ Bank, which has been working to raise the N25 billion capital base required.

Worldwide, Islamic banking is gaining ground. Many other countries including predominantly Christian ones have established and many are considering establishing Islamic banking.

It is more than a quarter of a century now since the practice of Islamic banking and finance began in earnest. The Dubai Islamic Bank, a private company, as well as the Islamic Development Bank, a symbol of the Muslim peoples’ endorsement of the idea launched by the Organization of the Islamic Conference (OIC), were both established in 1975.

The UK for example, has a minority Muslim population of about 4 percent, and has amended regulation to cater for Islamic banking. South Africa also has a minority Muslim population of about 2 percent but has had Islamic banking since 1989.

Japan has begun the introduction of Islamic banking and China is also introducing Islamic banking. Countries across Europe, Africa and Asia, notwithstanding the significant presence of Islamic banking in the Middle East, have begun embracing the Islamic finance and investment philosophy.

Other Christian-owned institutions are also seeking to introduce interest-free financial products to serve clients regardless of their religion because they can now see that it is part of the international financial system, which is an alternative system of financial management as opposed to the market-based conventional system whose excesses nearly collapsed the world banking system through junk derivatives as collaterised debt obligations backed by mortgages in the United States.

Islamic banking was the only institution that was not affected in 2009 when the global financial turmoil swept the whole world.

Despite global recognition of the concept, Nigerians are currently divided on whether to adopt the system or not.

Many people, mostly Christian are calling President Goodluck Jonathan to prevent its emergence. The Christian Association of Nigeria (CAN) have renounced the proposal and urging President Goodluck Jonathan to discourage it.

The stance of President on the issue would be known today as he is expected to attend a conference on Islamic and Non-Interest banking in Abuja. Whatever he says will be a determining factor for the adoption of the system.

Many people are seeing the concept as a way of Islamizing Nigeria and the banking system.

The CBN deputy governor, Dr. Sera Alade has said that the concept will not Islamize the country but rather will be beneficial to all.

One of the leading scholars on Islamic banking, Sheik Ziyaad Mohamed said Islamic banking is about ethical business transactions and it caters for all categories of people irrespective of their religious background.

He said Islamic banking is about removing the moral hazard.

“It is about removing the practice of interest which is not something only unique to Islam. Other monotheistic religions including Christianity also do not accept usury. Islam is not the only religion that denies or prohibits usury; it is perhaps because the rules of prohibition are quite prescriptive and structured that it has achieved world prominence in a short space of time,” he said.

What is Islamic banking?

Scholars have seen Islamic economies as part of dynamic and universal ways of life that promotes social interaction at the highest possible level. It says that wealth must be distributed in ways that earn pleasure of the one who provides it and prohibits earnings like return of interest or sale of immoral products and services.

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Idris AhmedDaily Trust

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Direttore Responsabile Giuseppe Frangi