Financial institutions must shun extreme capitalism
Sterling Bank Plc has sustained its public awareness on interest free banking (NIB), with a lecture titled: "Reducing Poverty and Unemployment through Non-Interest Banking," in a bid to further deepen understanding of alternative financing in the country.
Seasoned scholars and policy makers on various aspects of NIB presented papers and made valuable contributions during discussions at the public lecture, which held at the Syrian Club, Ikoyi, Lagos, with participants from the Muslim community in attendance.
Meanwhile, a financial expert in non-interest banking has advised Nigeria's financial institutions not to go to the extreme in all business dealings if they must meaningfully impact on the economy positively.
A discussant at the forum and Executive Director/Chief Executive Officer, Clearpath Islamic Centre, Imam Abdur Raheem Seyi, argued that if banks truly want to fund education-related businesses, their orientation must change from being materialistic and capitalistic to something better.
A Senior Lecturer, Faculty of Business Administration, University of Lagos, Dr. Tajudeen Yusuf, identified ignorance as the major challenge facing the concept of non-interest banking in Nigeria.
He noted that the recent raising of N100billion Sukuk by the Federal Government for road construction purposes will help reduce the lack of knowledge, and enhance the importance of the initiative as a major source of finance.
Yusuf disclosed that Vice President Yemi Osinbajo recently told members of the Christian Association of Nigeria (CAN) that the recent adoption of non-interest banking by government to finance infrastructure in the country was not meant to Islamise the nation.
Delivering a paper entitled, "Understanding the practicability of maqasid al-Shariah through Non-Interest Banking," Dr. Abdur-Razzaq Abdul-Mojeed Alaro, Associate Professor of Islamic Law, University of Ilorin, noted that the Banks and Other Financial Institutions Act (BOFIA), in Section 43 (1) states that for an Islamic bank to be established, it must require the express permission of the Governor of the Central Bank of Nigeria (CBN).
He explained that the term maqasid al-Shariah refers to one of the foundational goals of the Islamic faith, which in this context is zakat (charity tax).
Alaro said the total assets of alternative finance globally is already more than $2trillion with more than 80 per cent of it belonging to Islamic banking.
He added that global Islamic banking assets witnessed significant growth consistently for years at a compound yearly growth rate (CAGR) of about 17 per cent.
Alaro, who also doubles as a member of the CBN's Financial Regulation Advisory Council of Experts, noted that the global profit pool of non-interest banking is set to triple by 2019.
He added that despite the impressive current and projected growth estimates, it is believed that the operations of non-interest banking were not based on the foundational goals of the Islamic faith.