The existence of non-interest banking, otherwise known as Islamic Banking in Nigeria, would give support to achieving stability in the financial system in event of market crash or crisis, an expert has said.
Shaikh Ziyaad Mahomed, Chief Executive Officer, Islamic Finance Institution of South Africa (FISA), noted that because conventional banks are interest-rate dependent, they are susceptible to interest rate volatility, which is capable of upsetting an economy.
Mahomed, who was a Course Director/Facilitator at a training programme on Islamic banking put together by Metropolitan Skills Limited in Abuja, stated that only non-interest banks were spared in the 2009 global market crash which resulted in the crash of many economies across the world.
"The Islamic banking philosophy has proven itself. In the 2009 market crash, Islamic banks were more profitable than the interest-based banks because the crash was basically an interest rate crash. 350 banks closed in one quarter in the United States alone.
Another example is the hedge funds where 1,153 funds has been opened in the last one year alone and 750 have already collapsed. Hedge funds are not acceptable in Islamic banking because of issues of uncertainty and gambling," he explained.
He noted that while conventional or interest-based banking focuses on the money itself to make more money (interest) from it, non-interest banking on the other hand focuses on investing the money in the system where people are actually working into to provide infrastructure, amenities and other services.
"Conventional banking is focused on the money itself, trying to make more money from the money. But Islamic banking focuses on trade. We want to see profit that is made on the money through work. We talk about work and responsibility and we say that money cannot earn money unless you put it to work within the system, thereby empowering and uplifting the economy. That is how it works and it is highly profitable," he said.
Ummahani Amin, Director, Metropolitan Skills Limited, said that the training which has as its theme "Fundamentals of Islamic Finance & Takaful - 4-Day Masterclass" was organised to educate regulators and practitioners about the concept of Islamic banking, investment or finance.