University don identifies prospects, challenges of Islamic banking in Nigeria
An Associate Professor of Islamic Banking and Finance, Dr Adam M. Abubakar, has asserted that the rapid growth of Islamic Finance in Nigeria will create direct and indirect jobs for the teaming millions of unemployed youths and other opportunities for Islamic Finance, Banking and related professionals in the country.
Solacebase reports that Abubakar observed that with three full-fledged Islamic Banks, two Islamic Bank Windows, three Islamic Microfinance Banks, four Takaful Companies, six public Sukuk issuances, four Standalone Fund Managers, nine Halal Mutual Funds and the introduction of non-interest pension fund for all Pension Fund Administrators, the prospects of Islamic Finance in Nigeria are brighter.
A statement issued on Monday by Abdulkadir Ahmed Ibrahim, Special Assistant on Media and Publicity to the Director General of the International Centre for Islamic Culture and Education, ICICE, indicated that Dr Adam Abubakar stated this at a Public Lecture titled: “Islamic Vs Conventional Banking in Nigeria: A Comparative Analysis” he delivered at Al-Noor Mosque, Wuse II, Abuja.
‘’Abubakar who lectures at Yobe State University, Damaturu, said with Nigeria operating the “most robust” Islamic finance legal framework, the Central Bank of Nigeria (CBN) guidelines for the regulation and supervision of institutions offering non-interest financial services, and the support and synergy of regulatory authorities, the emergence of non-interest financial system in the country will help appeal and douse the apathy among public to accept the system that now suits their preferences and recognize their religious values and beliefs, ‘’the statement said.
‘’He said Islamic Banking is an alternative form of financial intermediation that is based on the Islamic value system adding that “although based on a religious law, it is nevertheless not a religious product or service that is exclusive to a particular faith, it is universally accessible to and enjoyed by people of diverse religious persuasions or ethical beliefs across the globe”.
‘’He explained that Islamic Banks operate CURRENT ACCOUNTS on behalf of their clients for their convenience and safe custody of their deposits while the Depositors can authorize the bank to utilize their funds at the bank’s own risk.’’
‘’SAVINGS ACCOUNTS are also maintained at Islamic Banks on the principle of Al Qadr al-Hassan that permits Depositors to allow the Bank to use their funds at the Bank’s risk but guaranteeing full return of deposits and sharing of any profits voluntarily.’’
‘’Going down memory lane, Dr Adam Abubakar, who is an Associate member of Chartered Institute of Stockbrokers of Nigeria and the Chartered Institute for Securities and Investment (United Kingdom), said the origin of Islamic Banking dates back to the dawn of Islam about 1,400 years ago as historical books indicate that during the first century of Islam, some forms of banking activities were practiced similar to modern banking transactions.’’
“The first cheque in history was drawn by a Sarraf (banker: Sarraffeen – bankers) in Baghdad in the 4th Century AH (10th Century AD) and it was cashed by the prince of Aleppo, Saif Al-Dawla Al-Hamadani.”
According to the statement, the development of (modern) Islamic Finance began in 1990 with the incorporation of the Accounting and Auditing Organisation for Islamic Financial Institutions (AA0IFI) while CITIBANK one of the largest conventional banks in the world launched its Islamic finance operations under the name Citi-Islamic in Bahrain in 1996.
He said some Western countries such as the United Kingdom, have amended their regulation to facilitate the offering of Islamic financial services and currently the sector is growing at a rate of 15 to 25% per year with Islamic financial institutions managing assets worth $2.7 trillion globally.
Dr Adam Abubakar identified some of the Challenges facing Islamic Banking in Nigeria such as Lack of Public Awareness/Adequate Knowledge on Islamic Banking; Lack of proper understanding by the generality of Muslims; Diversity of Opinion among Scholars and Shortage of trained Islamic Banking Professionals.