A five-day regional course on the rudiments of interest-free Islamic banking kicked-off Monday at the Paradise Suites Hotel in Banjul. The course, organised by the West African Institute for Financial and Economic Management (WAIFEM) and attended by bankers from the sub-region is geared towards exposing bankers in the region to the basic tenets of Islamic banking.
Welcoming participants to the course, Professor Akpan H Ekpo, director general of WAIFEM explained that Islamic banking is a banking model based on profit and loss sharing system and rests on the Islamic doctrine of 'universal permissibility' in business dealings, which states that everything is permissible unless it is clearly prohibited.
He further noted that Islamic banking is expected to give depositors another choice of when to deposit their wealth. "In our conventional banking environment, it is a fact that borrowers are at times rendered miserable and frustrated leading to failure as a result of overbearing interest rates.
This irony is that while lending rates are always in an upward trajectory, depositors' rates pitiably low. A case for non-interest or Islamic banking would therefore bridge this gap between the depositors and lending rates," he asserted, whilst affirming that Islamic banking sees its client as its own and in such, issues of greed, highhandedness, selfishness and corruption would always be checked.
He further explained that the objectives of the course is to provide a broad understanding on rudiments of Islamic banking, as well as provide clarity on the Shariah requirements and the avoidance of RIBA in modern day banking business.
The WAIFEM boss also seized opportunity to give a brief account of his institute. He informed participants that WAIFEM was established in July 1996 by the central banks of The Gambia, Nigeria, Sierra Leone, Liberia and Ghana, with a view to build sustainable capacity for improved macroeconomic and financial management in the constituent countries.
He said that since inception his institute has been enjoying short-term courses and as at end June 2011, some 10,200 participants including senior and executive officials of central banks and key policy ministries, national parliamentarians, senior policy analysts, journalists university lecturers and officials in both public and private sectors of the economy have benefited from the institute's programmes.
Ekpo finally expressed optimism that the course will enhance the knowledge of participants on Islamic banking for the efficient execution of their duties.
For his part, Amadou Colley, the governor of the Central Bank of The Gambia who delivered the keynote address, also spoke at length about the history and significance of Islamic banking and how it can sanitise the global financial system particularly at this era of financial troubles.
Exposing participants to Islamic banking in The Gambia, the Central Bank governor explained that the government of The Gambia realising the potential of Islamic banking in the country given its large Muslim population engaged the Islamic Development Bank in partnership to develop the necessary infrastructure to accommodate Islamic banking.
This partnership, he went on, resulted in the review of the Financial Institutions Act 1992, now the Banking Act 2009 and the relationship facilitated the creation of a legal framework for the establishment of Islamic banking in the country, which was followed by the necessary regulatory framework to adequately supervise Islamic banks.
"In 1997, the first Islamic institution, the Arab Gambia Islamic Bank, was established through private equity participation including the Islamic Development Bank. Within a decade, the bank was able to mobilise 25,000 depositors with a total deposit of D400 million," Colley revealed, adding that that the bank engaged in products such as Murabaha, Mudarabah, Musharakah and Wikala".
He also revealed that to further deepen the financial system and create an investment outlet for the Islamic banks and other Sharia compliant investors, the Central Bank of The Gambia developed an investible Islamic instrument called Sukuk Al Salam in 2007.
He explains: "The instrument had a 'yield' comparable to the Treasury Bills and it gained popularity and attracted investments from the Islamic and conventional banks alike.
To compliment the activities of the Islamic bank under Sharia and further deepen the financial sector, the insurance legal regulatory framework was reviewed to cater for Islamic insurance, and in 2008 the first Islamic insurance company was created to operate under Sharia principles."
Colley also urged participants to take maximum advantage of the opportunity to enhance their knowledge and skills on Islamic banking and as well as cultivate personal and professional friendships.