•Says his predecessor, Charles Soludo started it
•It has deepened our financial system — Prof Alaro
•UNILAG to begin postgraduate course on Islamic finance soon — VC
Former governor of Central Bank of Nigeria (CBN), and the 14th Emir of Kano, Sanusi Lamido Sanusi, has commended some non-Muslims for their support, encouragement on the success of Islamic Finance, in Nigeria, adding that the decision of his predecessor, Charles Soludo applying to the Islamic financial services board in Geneva as the CBN governor led to the success story of the non-interest banking in the country.
Sanusi who spoke on Sunday in Lagos as the special guest of honour at the 5th national discourse organised by The Companion, an association of Muslim businessmen and professionals held at the main auditorium of the University of Lagos preached religious tolerance among Nigerians.
The discourse, which was themed; “Islamic Finance Experiment in Nigeria: Gains, Challenges and Prospects,”
He advised Muslims to always keep their non-Muslim friends, adding that despite opposition to it by some individuals and religious leaders, the workable suggestions of some non-Muslims, under his watch, navigated through the challenging moment.
He therefore said reacting to criticisms based on religious perception and that taking individuals’ opinions to represent the opinion of a people or their religion cannot be justified.
Islamic finance birth in Nigeria
Tracing the story of Islamic Finance in the country, Sanusi said when he attended the meeting of the Islamic financial services board in Geneva as the CBN governor; many had accused him of attempting to Islamise the country.
“But those criticising us then never knew that it was actually my predecessor, Charles Soludo, who applied to the board that Nigeria should be a member. However, it was at the end of his tenure that we were admitted. So shortly after he left we were invited to the meeting and that coincided with my assumption of office,” Sanusi said.
He noted that many Nigerians saw the merit of the non-interest finance system but were blinded by religious sentiments.
Sanusi, however, commended those he described as patriots, saying despite religious differences; they contributed significantly to how certain relevant issues were resolved at the policy-making level.
“Their workable suggestions on how the CBN, when I was the governor, navigated through the challenging moment.”
He said; “For instance, people were complaining about sharia in some clauses and I said we could remove sharia. I said in the entire Qur’an sharia is mentioned only once. So everywhere sharia is mentioned in the policy documents, we changed it to Islamic legal jurisdiction. And a Christian also helped to coin the Financial Regulators Advisory Council of Experts (FRACE) to avoid the use of sharia.”
He said it was the former acting governor of CBN, Sarah Alade, who helped to coin FRACE, to escape the religious sentiments.
“Meanwhile, when we were at the National Assembly, one of the critics was a female representative from Anambra State. She stood up and pointed fingers at me. But when she finished speaking, I told her that the Islamic Development Bank had given the finance ministry a loan for agriculture and three states including Anambra would benefit. So I told them it is not about Muslims or Christians but about individuals,” he added.
Meanwhile, Sanusi said as of the time he was being quizzed at the National Assembly, 40 per cent of the shareholders that had bought JAIZ Bank’s shares were not Muslims. JAIZ Bank is Nigeria’s first non-interest bank in the country.
The keynote speaker, a professor of Islamic Law at the University of Ilorin (UNILORIN), AbdulRazzaq Alaro described Islamic finance as a form of charity, saying; “Islamic finance is interest-free but not profit-free.”
He said the United Kingdom is the leading promoter of Islamic banking globally and the head of Islamic finance at the World Bank is a Nigerian Christian, Abayomi Alawode.
Islamic finance’s gains
Prof Alaro said Islamic finance has deepened the financial system in Nigeria by providing alternative investment and financing outlets to many households in the banking, insurance and capital market segments.
“This is evidenced by the growing demand for, and ever-increasing customer base of Islamic financial services in the country. From just one and only non-interest financial institution in 2012, the industry has grown in only one decade to four licensed full-fledged non-interest banks; a window of a conventional bank; and three microfinance banks, among others,” he said.
Prof Alaro, who is also a member of CBN’s FRACE, said corporate entities, as well as the Nigerian government, have also benefited from Islamic banking.
Prof Alaro, however, said the market share of the Islamic finance industry is still very low, when compared to the conventional market.
He spoke about other challenges including lack of adequate liquidity management instruments in the Nigerian Market, dearth of innovative but yet shariah-compliant products, poor skilled human capital resources; poor Islamic finance literacy, and what he termed jurisdictional gaps in Islamic finance-related disputes.
On what he would recommend to Nigeria, Prof Alaro said since Islamic finance institutions are by law barred from accessing funds meant for haram products and activities, such as alcohol, gambling or betting, pornography, among others, appropriate measures should be taken to attract more investment into the sector, including government patronage, where necessary.
“The need for increased capital for the Islamic finance industry in Nigeria cannot be overemphasised. It is only natural that funds meant for religious activities such as the annual hajj must be deposited exclusively with the non-interest financial institutions,” he said.
Still, on recommendations, he said regulators and operators of Islamic finance institutions, through their CSR projects, should support universities and academic centres to facilitate capacity building for the industry through the endowment of professorial chairs, the establishment of specialised academic departments and introduction of short and long term professional programmes in Islamic finance.
He also advised that non-interest financial institutions in Nigeria should invest heavily in financial technologies, otherwise called Fintech, noting that it is where the future of banking services lies.
He recommended that CBN should collaborate with the National Judicial Institute on the imperative of training the country’s judges on the intricacies of Islamic finance.
“In Feb 2022, the Nigerian Copyright Commission reached an agreement with the National Judicial Institute on the training of judges on intellectual property law,” he said.
The guest lecturer also commended Bayero University, Kano (BUK) for introducing courses in Islamic finance, urging other universities in Nigeria to follow suit.
On his part, the national president of The Companion, Kamil Olalekan, said the 5th discourse falls under the fourth theme of the organisation’s objectives which tagged strategic and community engagement.
“As an organisation of intellectuals, we have a responsibility to initiate or contribute to debates on key national policy issues affecting the well-being of the nation. We are motivated to do these not only as a patriotic duty but also because our own businesses and professions are affected by such policies. “The topics that we discuss are influenced by timeliness and relevance to the Nigerian polity. In the past four editions, we addressed the issues of corruption, national elections, energy and food security,” he said.
Also, the vice-chancellor of the University of Lagos (UNILAG), Akoka, Oluwatoyin Ogundipe, who was also present at the event, said the university will soon begin a postgraduate course on Islamic finance.