The Moment (London)

21 February 2012

Nigeria: Islamic Banking Will Enhance Healthy Competition, By Experts

SOME financial experts have said that the introduction of none-interest banking would bring about healthy competition in the banking sector.

The experts, who spoke with newsmen in Lagos on Monday, said that non-interest banking would impact positively on the real sector of the economy.

According to them, it will add more value to business and boost productivity in the country.

They all agreed that there is nothing wrong with introduction of Islamic banking if it would bring economic development.

Nigeria's first Islamic bank, Jaiz Bank, started operations in Abuja, Kaduna and Kano in January.

Dr. Samuel Nzekwe, a former president of Association of National Accountants of Nigeria (ANAN), said that the concept of non-interest banking is good because it does not charge interest on loans.

'The policy portends good because the profits and the loss made in the course of doing business by the customers will be shared under the Islamic banking', he said.

Nzekwe said that it would give opportunities to manufacturers to access cheap loans that would stimulate the sector.

He, however, advised the Central Bank of Nigeria (CBN) to strengthen the regulatory framework so that what happened to conventional banks would not happen to non- interest banks.

Dr. Olumide Owoade, a senior lecturer in the Department of Economics, Lagos State University, advised the apex bank to put necessary facilities in place to ensure proper monitoring of non-interest banks.

He advised Nigerians to take advantage of the gains that would be created by the banking system.

The lecturer said that the non-interest banking would also enhance entrepreneurship 'since the banks will be fully involved in both decision taking and profit sharing'.

He said the ability of CBN to provide appropriate infrastructure and capacity building would determine the success of non-interest banking.

Mr. Wole Olowu, General Manager, True Bond Microfinance Bank, advised the CBN to be careful in handling issues of non-interest banking to prevent religious crisis.

Olowu said Islamic banking has the capacity to galvanise small and medium enterprises as well as generate employment.

He told NAN that it would make conventional banks to be cautious on their high interest rates, as Islamic banking would not charge interests on loans.

'It is a good development for the economy because it will create competition among the banks and aid economic development', he said.

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