Islamic banking: The reality beyond the propaganda

In turn, several defenses were put forward especially by the Muslim community (JNI, NSCIA, SCSN, et al.) in support of the model and as a counter to the allegations of CAN. But it is obvious that the most important issues were neither raised nor addressed by both parties. There is no gainsaying that the banking […]

In turn, several defenses were put forward especially by the Muslim community (JNI, NSCIA, SCSN, et al.) in support of the model and as a counter to the allegations of CAN. But it is obvious that the most important issues were neither raised nor addressed by both parties. There is no gainsaying that the banking model is simply a profit and loss sharing business one built on fairness, supported by both Islam and Christianity and practiced by the secular nations we pretend to be emulating. It is equally important to note that patronage of these banks is purely by choice and without discrimination.

Beyond the propaganda lie opportunities such as investment, which some banks are exploring. For example, Stanbic IBTC Bank (not owned by Muslims) has secured an approval in principle, could we say that the bank intends to Islamize the country too? It is also interesting to know that a couple of conventional banks are lining up for licenses. Could we also look at the positive impact of foreign direct investment that it could bring to our nation, for instance, in 2010/2011, Gateway Bank UK (a full shariah compliant bank and a subsidiary of Securities House Kuwait) invested about £85m in the UK, the UK government awarded an OBE (Order of the Britain Empire Award) to the MD as a recognition of the bank’s leading role in innovating shariah-compliant services and sustainable Shariah-compliant investment in the UK for the past 30 years. How about local entrepreneurs that will have an opportunity of accessing less expensive funds for productive investment purposes which will in turn create more employment thereby reducing the number of army un-employed youths? It is also worth mentioning that it is a financial inclusion opportunity for owners of high percentage of money held outside the banking sector to have an avenue to deposit their monies in these banks (they believe in) which would in turn increase savings, investment, employment, consumption and revenue to the government and so on. One may therefore wonder what assumptions and case studies are CAN using (statistics of converts to Islam in other countries), where the leaders studied (Harvard, Oxford, or NIPSS?), how they understood the banking model and its hidden agenda of Islamization better than the Government, other financial sector stakeholders and any other group of professionals (individuals/corporate).

The reality on ground is that Islamic banking in Nigeria is evolving and as such its success depends on how well it competes with the existing conventional banking that have a well structured market and instruments. The clarifications that may be required by our fellow compatriots from the Apex bank are how it will safeguard investor/customer funds? How it will ensure that funds aren’t mixed up with prohibited transactions (interest, gambling e.t.c) and that there is no discrimination among stakeholders? Given the likely projection of high deposit, what investment options do we have to tackle excess liquidity and how monetary policies will affect its operations and the economy at large? While To the Muslim faithful, this is not the first time Islamic banking move was made in the country, It is really disappointing that given the population estimate of 65 million Muslims, we are not talking of 10 -20 Islamic banks but rather Jaiz Bank which couldn’t be made a reality up till today, while the commonly referred UK alone that has an estimated population of 60 million ( with less than 5% Muslims) are having 22  banks practicing Islamic banking, out of which 5 are fully shariah-compliant. Also, Shariah Advisory Council which is a mandatory requirement, how readily will their verdicts on Shariah compliance of a particular product/service be accepted within Muslim community and by other scholars? Majority of Muslims also think that the projected 65 million Muslims in the country have catered for the dearth of qualified professionals that will steer the activities of these banks, but this is just a dream. Or how many Muslims are training their children to study Islamic Finance? How many existing Islamic scholars are equipping themselves with the knowledge on modern banking practice and how it can be made Shariah-compliant? How will sensitization be made in order to make the targeted customers accept it? Therefore, the Muslim faithful who consider Islamic banking to be a right should know that it is not going to be on “auto pilot” and that its success is not by writing mere rejoinders, but by making a concerted effort and taking hard decisions to patronize the banks. Anything short of these will lead to mortification of the system and subsequently their belief. Importantly also, the Apex Bank should also ensure that the new banking is appropriately regulated to enable the derivation of maximum benefit  and avoidance of adverse effect on the Nigerian Economy at large.

Therefore, unless we change the configuration of our minds & thoughts to “progressive-mode”, our aspirations for building a better society will remain a mirage and so shall it remain buried by our mendacity and un-seriousness, and so shall we also live in a permanently culpable state. At this point, I wish to make a clarion call for value-chain analyses of Islamic Banking on the Nigerian economy and not a faith-based debate.

Sadiq writes from Goruba Estate Katsina and can be reached on [email protected]