Lagos — Osaro Eghobamien, a Senior Advocate of Nigeria (SAN), at the weekend chided critics of the non-interest banking framework (Islamic banking), insisting that their objections result more from a lack of understanding of what the banking product is really about.
Eghobamien, noted that Islamic banking "is just a process by which the bank participates in the profits that is made, and that is how the bank makes its profit."
Now, he noted in an exclusive chat with Daily Independent, that "the CBN wants to regulate that process and you say that you are worried about that. I think that perhaps the problem stems more from a lack of education about what it really means. All it meant is that a bank can provide its product."
He added that it would have been worse, if the CBN refused to regulate it, adding:
"You see, all the leading banks in the world provide Islamic banking desk. There is absolutely nothing wrong with it. But maybe we need education. I have heard some inflammatory comments from very senior leaders in Nigeria. It just demonstrated ignorance because they need to ask what it entails. It is only a product that is being delivered by a bank and you have a choice."
Speaking further, Eghobamien said: "If you go into a bank and say I want a loan and the bank says this is the interest I want to charge and you go into another bank that says I will not charge you interest, I will share in the profit, what is wrong with that? I feel very saddened when I hear comments of people who don't understand what is going on and I feel very sorry for the governor of CBN because to be honest, he is expanding the sort of services that are being provided by banks in Nigeria just like in many part of the world and part of the world whose foundations are based on Christianity.
"If somebody who is a Muslim should walk into a bank and says that I want you to give me a loan based on certain principles, how does that turn around for you to say it is an attempt to Islamize Nigeria. I am a Christian but I took time to go and read about it and I understand that there is nothing to do with Islam.
"Yes, there are parts of it which says it should be sanctioned by certain persons in showing that you have gone through the process but that is where it ends. You know it is something that borders me a lot because before I speak about anything, I go and read about it. I don't just speak because the Bible says my people perish for lack of knowledge. I hope Nigeria does not perish for lack of knowledge."
Meanwhile, Director General of the Infrastructure Concession Regulatory Commission, Mansur Ahmed, on Monday at a meeting with regulators of Nigeria's financial system, urged the Central Bank of Nigeria (CBN) to release the regulatory framework for the non-interest financing model.
He expressed hope that the Islamic financing would provide opportunities that ICRC can tap in, to help bridge Nigeria its N32 trillion infrastructure deficit across sectors such as transportation, power, water supply, education, housing and health, is beyond what the public sector can afford, hence the need to explore other alternative financing avenues. "The critical imperatives for the successful issuance of Islamic bonds (otherwise known as Sukuk) in Nigeria will include the right regulatory and taxation framework, transparent transaction structure, credit rating, marketing, risk and mitigation measures, appropriate technical capacity and guarantees," he stressed.
Ahmed said Sukuk is particularly well suited for the Public Private Partnership being promoted by the federal government to upscale the nation's level of infrastructure.
"Sukuks are becoming important means of funding large scale investment projects around the world, while for investors; the Sukuk market provides greater potential for diversification into new asset classes. Sukuk has matured into a diversified, internationally accepted instrument to raise corporate finance for acquisitions or working capital purposes, or use in the transportation sector, real estate, infrastructure construction and petrochemical projects in several countries," he explained.
CBN Governor, Mallam Sanusi Lamido Sanusi, told the gathering that if Sukuk is properly harnessed, it would contribute to the effort of the Ministry of Finance to source funds from international markets and diversify sources of funding for projects critical to national development.
He enjoined relevant government agencies to develop trusts and securities laws that would enhance smooth operations of Sukuk and provide a level playing field for participants in the capital market.