Abuja — The Central Bank of Nigeria (CBN), has identified the dearth of knowledge, skills and technical capacity to regulate, supervise and operate Islamic bank (the non interest banking model), as major hindrances to the successful take off of the model.
The non interest banking model is a banking regime that offers services, products and financial instruments based on compliance to Islamic laws.
Special Adviser to the CBN Governor, Dr. Bashir Umar, made this known at a workshop organized by the Nigeria Deposit Insurance Corporation (NDIC), at the weekend where he also noted that higher quality personnel who had experience in project management and Islamic jurisprudence would also be required for the smooth implementation of the banking regime.
In his paper titled, "Islamic finance in Nigeria: Issues and Challenges", Umar also said lack of adequate legal, regulatory and supervisory framework, which had restrained potential foreign investors, absence of accountants and auditors knowledgeable in accounting and auditing standards pertinent to non interest banking as well as dearth of Islamic scholars knowledgeable in conventional financial markets are other challenges facing the model.
According to him, "The key challenges facing the model include the dearth of knowledge, skills and technical capacity to regulate, supervise, or operate non interest banks. Higher quality personnel with experience in project management and Islamic jurisprudence are required for financing and marketing activities.
"Lack of adequate legal, regulatory, and supervisory framework, which is restraining potential foreign investors, and the absence of accountants and auditors knowledgeable in accounting and auditing standards pertinent to non interest banks."
"It is evident that from the resilient nature of Islamic finance that enormous opportunities abound and positive and far-reaching impact is highly expected, for the Nigerian economy."
"However, the challenges of operating this system are not to be overlooked. The positive indicators are that regulators are bracing up to address."
To facilitate the smooth take off of the model, Umar called for "an extensive capacity building through collaboration among various stakeholders to develop cognate expertise in non-interest banking, development of an adequate regulatory and supervisory framework for the effective operation of non-interest banking in Nigeria."
He said that considering the tremendous importance of the regime to infrastructure financing, there is an urgent need for these bottlenecks to be removed.