|
Nigerian factor: Between reality and Islamic banking
Written by Paul Tempus TemitopeTuesday,
The furore about Islamic banking led me to conduct researches on the topic, and to also rely on various articles and reports in the Nigerian press.
In Saudi Arabia and the other countries of the Middle East, even Malaysia, the country with the largest Muslim population, the regular kind of banking is king. And the Muslim billionaires of the oil rich Middle East all invest for profit (riba) in regular banks, even in the West.
How can regular banking be seen as western or even Calvinist, when its development was due to the primeval human desire for profit all over the world? Theory is one thing, practice is another; profit-making money lenders thrived widely in the Middle and far East prior the establishment of ‘western’ banking. Indeed, the head of the Central Bank Nigeria, who nurtured his career in regular banking, is a professed Muslim. He may have invested in bank stock for profit, like most top bankers. A study of all the boards of the regular banks in Nigeria carried out to discover those therein would be educative.
I have concluded that Islamic banking is not an interest-free banking. It is a relatively low-interest banking. The people or banks that give out the loans share profit. Profit is gain. Interest is gain. It is a matter of semantics, or methodology of arriving at the gain; after all, gain is gain.
Indeed, interest is a kind of profit. Islamic banks do not give out loans free of charge. You pay back more than you borrow. Islamic banks ensure that they do not lose to inflation and they further ensure some profit. They share profit and try not to share loss, like other banks. But if you invest in a regular bank by buying shares, you may have to share loss. If one invests in an Islamic bank, will he have to share in any loss made by the bank? Over to Sanusi. Another question; Will non-Muslims be able to access loans from Islamic banks? If not, would this not be a form of discrimination? Will Muslims continue to enjoy access to private education institutions established by other faiths? And if other faiths establish their own low-interest banks instead of buying jets, will Muslims enjoy access to such banks?
What Nigeria needs urgently is the infusion of capital, even monies from abroad at low or even zero interest rates, to be properly and effectively utilised to develop our critically poor societal infrastructure; roads, railways, electricity; potable water, etc. But getting money is not enough. Using it properly is just as important; after all, Obasanjo’s government wasted trillions of naira on poorly- implemented and unproductive power reforms. Sanusi, can Islamic banking drive the improvement of infrastructural development in Nigeria?
In any case, a situation such as obtains now, where Sanusi’s Central Bank of Nigeria (CBN) driven deposit rates are extremely low, and interest rates are extremely high in ‘regular’ banks cannot lead to any meaningful economic development in Nigeria, despite the theory being spouted by various economists and bankers, masters of impractical paper theory and lackeys of the Interntional Monetary Fund (IMF) and the World Bank. Sanusi, will Islamic banking aid in solving this problem?
A great number of bankers (not all), both male and female, of all religious persuasions, even others, such as agnostics and atheists, are dishonest or incompetent or both. Why have so many banks run into severe, even terminal problems in the recent past? High education without honesty and integrity is a sure route to the kind of bold-faced, hi-tech, large scale and digital theft executed by ‘technocrats’ recently and regularly exposed in the banking sector. A lot of big time bankers are specialist money launderers. Some bankers and investors, just like millions of other Nigerians, are pan/metro religionists, who utilise diverse combinations of ‘special’ utilities such as charms, prayers, powders, sacrificies, soaps, sponges, perfumes, body lotions, handkerchiefs, potions, oil, amulets, chains, rings, hontu fetish drinks, loin-clothes, buttock-beads, etc. associated with several religions and cults just to ‘make it’ and loot treasury. Some swear terrible oaths at special shrines.
Some lady bankers even dish ‘delicious’ personal favours to get big accounts and deposits. Sanusi, will Islamic banking aid in solving this problem?
Food for thought: A teenage university undergraduate recently told me that Nigerians usually mess up any system that works well elsewhere. Islamic banking is alleged to work well in other countries. What is the guarantee that the ‘Nigerian factor’ will not negatively affect it? Will prayers alone curb the ‘Nigerian factor’?
Trouble in universal banking, problem in micro-credit banks, robbery in wonder banks, fraud in commercial banks, embezzlement in the Central Bank, etc. Yet, the big men/investors, directors, managing directors, executives and shareholders in the ‘regular’ banks that have made serious monies over the past few decades belong to various religious faiths. When the BCCI collapsed, a lot of Nigerians lost millions and billions, yet that bank was run by people mainly from the middle and Far East. Sanusi, what money can’t be embezzled? Embezzlement is not exclusive to the West.
The practitioners of other religions would be very well advised to propose their own faith-based banking system and source for supportive and establishment funds. Perhaps, a virile sector of religious faiths-based banking system may drive the enhancement of the positive development of the banking system, whilst providing low-interest funds for development and providing beneficial assistance and services to millions of Nigerians, even in a sector, such as cheap and affordable housing. Sanusi, will you loudly proclaim your readiness to entertain other faith- based banking systems?
But what is most difficult in Nigeria is the recovery of funds paid out to borrowers/creditors, because a lot of Nigerians are unfortunately notorious for always finding it difficult to repay loans, even if friendly and interest free.
Source: Tribune, 3rd January 2012
Back
Lawyers Advocate Enlightenment on the Issue of Islamic Banking
KELECHI EWUZIE
Experts from the legal and financial sectors of the economy have argued for and against the merits or otherwise of the recent proposal by the CBN governor Sanusi Lamido Sanusi to give approval for Islamic banking operation in the country and the subsequent implication to the economy of the country.
Speakers and discussants in their various summation on the topic ‘Islamic Banking in a secular State, the Nigeria Perspective’ disclosed that given the nature of the concept as it relates to Nigeria, there is need to approach such an issue carefully adding that effort need to be taken to enlighten the populace more.
The seminar organised by The National Association of Catholic Lawyers, under our Lady of Perpetual Help Catholic Church witnessed key presentations and discussions from experts from financial sector and legal sector.
Nelson Ogbuanya, lecturer at the Nigerian Law school, in his presentation, ‘contesting the legality of Islamic banking in nigeria secular state’ reveals that the precursory steps towards determining the merit or demerit of the proposed Islamic banking in nigeria presupposes at least, a perfunctory analysis of the relevant laws the projects would potentially offend.
Ogbuanya further argue that none of the existing Nigeria legal framework provides a foundation upon which Islamic banking thrive, adding that neither the constitution nor the relevant laws regulating the banking industry in the Nigeria.
He therefore submit that allowing this model of Banking operation in the country no matter in want form would amount to giving preferential treatment to certain religious section of the country over the others.
Femi Sunmonu, managing partner, Femi Sunmonu and Associates on his part noted that the perceived misunderstanding over the issue of Islamic banking can be traced to the fact that we are not a modern state, he revealed that the issue didn’t just emanate from nowhere, but that people asked for it seeing the huge opportunity it presents to them to do business.
He pointed out that it was not the CBN that sorted people out to approve it; rather it was Muslims business people who approach the apex banking body to seek for such platform to do business based on their religious understanding.
On the concerns expressed by those who are not Muslims, the legal practitioner opines that all the issues of misconception should be put on the table for all to assess and learn to come to term with realities on ground.
According to him, it is high time we come to realise our peculiarity in this country and learn to live with such”.
Source: Business Day, 26th October 2011.
Controversy Still Trails Islamic Banking
From ISAAC ANUMIHE, Abuja
Since the Governor of Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, began moves to introduce the
Islamic banking system, the product has attracted so much anger in the Christian fold to the extent that the little achievements Sanusi made in the industry almost fizzled out.
Some of his critics reasoned that Nigeria is a secular state and so the introduction of Islamic banking smacks of Islamising the state. They believe that the introduction of the sharia banking system now is not appropriate in view of the destructive activities of Boko Haram.
To this effect, Nigerians, who lost relations or were injured, maimed or frustrated by the unscrupulous behaviour of Boko Haram, form the bulk of critics of Islamic banking. Some prominent Christian leaders say it will further inflame religious violence.
According to Father Paul Anyansi: “We have too much religious tension and so, it could stir up some more. This is not the time for it. The policies for Islamic banking are good in the sense that there is no interest. It doesn’t go against the beliefs of the Islam. But what we are trying to say is that this country is not mature for it now.”
Anyansi argues that although Islamic banking is community banking, it portends more dangers than its benefits. Said he: “It could be as effective as it is in England, America, Malaysia or countries where it is operated but for now, we are still growing. A lot of people are not accepting their brothers as their brothers. They are not accepting the differences between religions. It will create more problems than gains.”
The president of Christian Association of Nigeria (CAN), Pastor Ayo Oritsejeafor, also condemned the introduction of the banking system because it is a ploy to introduce Islamism into the country.
Many are of the view that CBN, which is the regulatory authority did not do much sensitisation before it was thrown at Nigerians with the result that some of the critics of the system do it from a position of ignorance.
However, Sanusi maintained that the product was an initiative of his predecessor, Professor Chukwuma Soludo, who is a Christian and his deputy governor, Mr. Tunde Lemu, who is a pastor. According to him, he only implemented a project left behind by his predecessor.
He also posited that Nigeria is introducing Islamic banking to bring more of the nation’s estimated 70 million muslims, who had remained unbanked, into the economy. Islamic law prohibits paying or receiving interest or investing in businesses that provide goods or services that are contrary to Islamic principles.
This belief has led to the creation of interest-free, Islamic banking in more than 50 nations where customers share in profits and losses. In an Islamic mortgage, for example, the bank buys the house, then resells it at a higher price, allowing the new homeowner to pay in installments.
In a recent Islamic banking summit, organised by the CBN, in Abuja, Ziyad Muhammad of the Islamic Finance Institute of South Africa told his audience that Islamic banking was about creating wealth for the community. “The ultimate objective is to ensure that anything that is introduced by the entrepreneur is done for the benefit of the community at large,” he said.
The CBN Governor asserted that the project had reached a level where it was irreversible and that any aggrieved person could go to court since it is only the court that can reverse it. Other Nigeirans spoke to Daily Sun:
Mohammed Daudu:
“What is wrong with Islamic banking? I don’t know why whenever people hear about Islam, they are jittery. Is Islamic banking not a system of banking just as First Bank and Oceanic Bank?”
Paul Aggrey:
“Nigerians are not mature to host such banks in view of the Boko Haram activities in the country now. It is not advisable to introduce such a thing in Nigeria now.”
Felicia Amuzie:
“Don’t we have enough banks in Nigeria? Is it a Moslem bank? Well, let the Moslems patronise it. As for me I have my own bank.”
Jaiz International Bank, an Islamic bank, was licensed to operate since 2009, but yet to take off.
Source: Sun, 29th August 2011.
Soyinka okays Islamic Banking
Nobel laureate, Prof. Wole Soyinka said yesterday there was no need for any Nigerian to have sleepless night over the Islamic Banking being championed by the governor of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi.
This is as the Attorney General of the Federation and Minister of Justice, Mohammed Bello Adoke was booed by lawyers at the on-going annual conference of the Nigerian Bar Association (NBA) taking place in Port Harcourt, Rivers state.
Delivering a keynote address at the conference entitled, "Sustaining an Enduring Democracy in Nigeria", Prof Soyinka said the fears that greeted the proposed Islamic banking were unnecessary, as long as the proposition does not contravene the law.
He said laws do exist in the banking sector, even as he said the country can practice any form of banking as long as such practice does not go against extant rules and regulations in the land.
He said the proposed Islamic banking which exists in other climes should not be an issue because it was not responsible for the scores of developments that have dragged the Nigeria backwards, including the Niger Delta crisis, the issue of Boko Haram or the epileptic power supply the country was experiencing over the years.
"Does the entry of Islamic banking contravene the law? Why is it much of an issue and attracting inflammatory remarks?
"Islamic banking is not responsible for the crisis in the Niger Delta, it is not responsible for the Boko Haram issue, neither is it responsible for the failure to supply regular power supply that we have heard over the last 60 years, Such a proposal should not give anyone sleepless nights," he asked.
Soyinka however stressed the need for national conference to dialogue and chart a more productive way to fast track the development of the country.
Meanwhile, in his effort to harp on the integrity of the judiciary and to justify the appointment of an acting President of the Court of Appeal, Adoke who represented President Goodluck Jonathan at the conference held at the Alfred Diette-Spiff civic centre attracted the wrath of the lawyers who booed him twice, while he was still reading his speech.
He however continued that the crisis in the bar was capable of bringing the judiciary to disrepute, which underscores the action of President Jonathan.
"The unity in the bar has fast eroded. We do all we could to sustain our nascent democracy", adding that the reforms undertaken in the judicial system by the federal government was germane in view of the pivotal role the judiciary plays in stabilising the nation’s democracy.
Adoke was booed by the audience over what many lawyers regarded as a "shameful" explanation trying to justify an anti-people’s decision which attracted their contempt.
The Attorney General’s embarrassment by the Lawyers came just as President Jonathan announced the appointment of Justice Dalhatu Adamu as the President of the Appeal Court in replacement of the suspended Justice Isa Ayo Salami.
In his address, the President of the Nigerian Bar Association (NBA), Joseph Daudu proposed to the members of the Bar that they begin a boycott of the courts until further notice. The boycott is to protest the decision of the NJC on Salami and the approval of the recommendation by the president.
Daudu, told the conference that the NBA would boycott the courts to show its total objection to the controversial decision by the NJC, a council which many believe was acting out the script prepared for it by the outgoing and embattled Chief Justice of the Federation, Justice Katsina-Alu.
Rivers state Governor, Rotimi Amaechi who declared the conference open described the NBA as an institution for the rich and not for the poor Nigerians who can not afford the huge amount of money for justice.
He alleged that only the rich in the country have access to justice because they can conveniently afford the cost of justice, adding that NBA has failed itself for not speaking in one voice.
Amaechi tasked the body to help Nigerians in finding out the number of barrels of oil produced in Nigeria, the amount in producing a barrel, why oil subsidy is not removed and why people lack jobs.
Source: Daily Champion, 23rd August 2011.
Back
Imperative of consensus building over proposed Islamic banking
I believe that, as Nigerians, we should welcome everyopportunity to broaden the base of popular participation in economic activities. Poverty has persisted in the country for so long because the economic space has excluded many disadvantaged groups like the Niger Delta.
This is part of the explanation of the violence that has continued to blight our national life, to the extent that the very fabric of the nation is currently under serious threat.
On this score, the introduction of non-interest banking would appear to be a welcome addition to
innovative efforts to bring otherwise marginalised populations into the mainstream of economic activity. However, every good thing always has its down side. It seems to me that the down side to the concept of Islamic banking is the religious colouration.
In a country that is quite familiar with mutual suspicion between the two major religions, those who are promoting this system of banking need a good deal of explanations to provide. However, those to whom these explanations are to be made need to have a listening ear. But, sadly, neither have explanations been coherent nor have those in need of these explanations been the most attentive listeners.
In a pluralistic society as we have in Nigeria, it is wishful thinking to expect any new introduction to an existing order not to generate controversy. Controversies are very often the opportunity that people have to get educated on issues outside the classroom. Thus, we have a responsibility in this country to insist that controversies are engaged in civilized ways and in languages that do not inflame tempers.
For a country that has experienced a civil war and is grappling with some virulent peace-time violence and insecurity, we cannot afford any controversy with the potential to degenerate into a religious war.
This is why as an elder, and one who has been involved in the politics of this nation for over 30 years, I am concerned that the current controversy over the proposed introduction of Islamic banking to Nigeria has the potential to further polarise the country along religious lines.
This concern has been particularly heightened by the pronouncements made in good faith by both the spiritual leader of Nigerian Muslims and Sultan of Sokoto, His Royal Majesty, Alhaji Sa’ad Abubakar III, and the President of the Christian Association of Nigeria, CAN, Pastor Ayo Oritsejafor, which could be misunderstood.
My special appeal to these prominent Nigerians in moments like this is that they should also advise their followers to exercise greater levels of constraint than in normal times in their pronouncements. Their followers should show stronger commitment to consensus building than to defence of their faiths. Indeed, this is my special appeal to all those commenting on the issue.
I strongly condemn the tendency of politicians, who are opposed to the present government, to exploit the vulnerability of disadvantaged groups to fan the embers of destabilisation. After all, it is under a peaceful atmosphere that programmes to eradicate poverty can be successfully implemented.
It is on this score that I call on the various agencies of government involved in this issue to promote greater awareness on this issue of Islamic banking that can lead to an amicable resolution of the seeming impasse. Likewise, I call on the media to exercise a high sense of social responsibility in handling this and other issues that currently threaten national security.
It will not be out of place to call on the President to set up an enlightened multi-disciplinary panel to review the whole concept of Islamic banking as currently conceived by its proponents and the bases of concern by those opposed to the system. This is with a view to finding a national consensus on its acceptability or otherwise; its implementation or alternative to the concept.
The panel should be given the mandate to conduct a thorough risk assessment of the system so that all stakeholders can reach a consensus on the way forward. In the meantime, I sincerely appeal to and call on all to stop making inflammatory comments on the issue in the interest of our great nation.
Chief Tony Anenih, former Chairman of Board of Trustees of the Peoples Democratic Party, PDP, wrote from Abuja.
Source: Vanguard, 12th August 2011.
Kenny: Islamic Banking: Furore versus agitation
BY JOSEPH KENNY
IF you want a loan, find a friend, not a bank —unless you are very sure you can make the payments. If not, before long you may be homeless. And if you make the payments, when it comes to menu, you may find yourself on 0-0-1. Interest rates may appear low in the beginning. But when they begin to compound, you may want to abscond, start from scratch under a new identity.
When banks lend to defaulters like you, they come on hard times. But banks are getting wise. They see through your bluff, your designer attire, your confident demeanour, your know-it-all discourse. They check your credit rating, your collateral, the fine print of your proposal. Their astuteness pays off. See the handsome profits banks are posting.
On the international scene, the name of the game is hardball. They prefer lending to governments, not businesses, businesses can declare bankruptcy, but governments cannot. What does it matter if loans are embezzled? Government can always impose austerity measures. The poor may complain, the rich are secure, and government cannot abscond. With compounded interest, its debts are many times over the original loan. Circumstances must be very hopeless before a debt is written off. Even then, be sure land or resources are not part of the bargain.
So economic injustice is the problem. What solutions are possible? The Central Bank proposes Islamic banking. Then comes furore. Why should government get involved in Islamic institutions? The furore, I think, is premature. Muslims are proposing a solution to a problem weighing on all of us. Why reject it out of hand, just because it is “Islamic”? Muslims, you may answer, are not bothered about economic injustice. They simply want to obey the Qur’anic command: No interest on loans. But, in fact, they are bothered about the injustice, and they see Islamic banking as a remedy.
Then what about its conditions? If you take a loan from an Islamic bank, the bank and its depositors have a share in your enterprise and its profits. Besides, your enterprise must be Sharia compliant, e.g. it cannot be a brewery. Maybe you do not like these conditions. No one is forcing you to use Islamic banking. Compare it with interest banking. It is for you to decide which is more advantageous.
But the furore gets stronger. Islamic banking is part of a scheme to turn Nigeria into an Islamic state, step by gradual step. Then comes agitation. Christians are persecuting Muslims. They won’t let us bank as our religion dictates. They squash our well-meaning initiatives. Islamic banking is our right. Do not stand in the way!
“Calm down,” the referee calls. Examine the issues. What are the Christian complaints? (1) The first complaint is that the original guidelines of 4 March 2010 (BSD/DIR/GEN/NIB/01/008) restrict non-interest banking to Sharia banking, i.e. no other form of non-interest banking is allowed: “A non-interest bank means a bank which transacts banking business, engages in trading, investments and commercial activities, as well as the provision of financial products and services in accordance with the principles and rules of Islamic commercial jurisprudence.”
This complaint is dealt with in the revised guidelines of June 21 2011, which reverses that restriction: “For the avoidance of doubt, Section 23 (1) and Section 66 of the BOFIA 1991, (as amended) explicitly provide for the licensing of Non-Interest Banks (NIBs). The CBN is obliged, by law, to issue licences to appropriate entities for the establishment of NIBs provided they meet the regulatory requirements for licences. In view of this, the CBN is open to receiving and evaluating applications for licensing of non-interest banking institutions based on other principles rather than the Islamic variant and will soon issue separate guidelines for non-interest banking under other principles.”
(2) A more serious complaint is that CBN, by setting up a Sharia Council to oversee the Sharia banking operations, is instituting government enforcement of Sharia observance. The March 4, 2010 Guidelines provides: “There shall be an advisory committee on non-interest banking within the CBN to be called the CBN Shariah Council (CSC), which will be outsourced. The CSC shall advise the CBN on Islamic laws and principles for the purposes of regulating noninterest banking business.” This arrangement follows the Malaysian model, whereby government guarantees the Sharia compliance of the banks.
But there are other models. Sharia banking is widespread in the United States. LARIBA Bank is licensed with the Nationwide Mortgage Licensing System, and in 19 states that require licences . The government and licensing bodies ensure compliance with general law. They do not regulate the Sharia aspect of its banking. That is a matter between the Bank and its customers or professional advisers. If word gets out that the Bank is faulty with regard to Sharia, customers can decamp to another bank that satisfies their conscience. As for the government, in that matter, it is hands off.
The U.S. model, in my view, seems appropriate for Nigeria. It should quiet the alarm over a creeping Islamic take-over. It would give Muslims scope to do banking as they see fit. And, if it succeeds, it will provide a model for others to imitate.
There has been some shift in this direction. Mallam Lamido Sanusi declared: “The Central Bank is not promoting or establishing Islamic bank, the CBN is simply licensing and regulating an institution that is allowed to exist under the law.” And the revised guidelines state: “Another significant review is the removal of any reference to Sharia Council which has been changed to Advisory Council of Experts whose responsibility is to advise the CBN on the appropriateness of relevant financial products to be offered by the institutions.”
Yet the word “appropriateness” requires clarification. Does that mean Sharia compliance, or simply conformity with general law? To allay all suspicions, CBN should clearly state that, in licensing Sharia banks or “windows”, it entrusts all Sharia regulation to the banks. If they want a warrantee, let them get it from the Supreme Council for Islamic Affairs.
Professor Kenny teaches at the University of Ibadan
Source: The Guardian, 17th August 2011.
Back
Islamic Banking: Muslims ready to go to war
It will be a celebrated effort if religious leadership in Nigeria would take full advantage of the present war-cry by Muslims to declare total war on the “Destroyer” (fraud and corruption). This will be a blessing accruing from the unfortunate statement by the Sharia Council.
The issue at stake is not one that calls for vamping or anger between the religious leaders. It provides a golden opportunity for religious leaders to wake up against the shame that envelopes Nigeria and Nigerian people.
Let us save Mr President any further distractions and help him out of error. Let him settle down to work. He has been so distracted that his priority amidst numberless very urgent and pressing national issues is the unimportant need to amend our Constitution altering tenure of service for Mr. President and their Excellencies to one term of six years. Bravo!
The leaders of Christian and the Supreme Council for Sharia need team up together to fight the common enemy: The Destroyer called Fraud and Corruption. Let them all empty their armoury and go into full scale war against the “Destroyer” starting by dealing with the purveyors of the “Destroyer” who dominate their rank and file.
There is this hypocrisy about Christian religion and Muslim religion as the two major opposing religions in Nigeria. This is a ruse. It is all hypocrisy. There is a third major encompassing religion in Nigeria representing a meeting point of the two religions: Christian religion and Muslim religion. That religion is the governing religion in Nigeria. It surfaces on issues bordering on “Steal, Kill and Destroy Nigeria”. Any semblance of disagreement between the leaders of the two religions is a farce. The name of the unifying and premier religion in Nigeria is “Fraud and Corruption” appropriately named “Destruction”.
In this religion Mammon is the god and both adherents involuntarily unite and bow in adoration. The Friday and Sunday separation is for the ignorant adherents of the two religions.
Christianity as I know it is NOT A RELIGION: IT IS LIFE. The faulty one is a religion.
I conjecture that the implications of what the Supreme Council for Sharia in Nigeria mean when it says that it is prepared to go to war about the Islamic banking is actually saying that they will wage war against poverty in Nigeria. If my assumption is right, then that will be a justifiable war. I make this assertion on the understanding that the attendant benefits of the Islamic Banking system: (If truly interest free banking) could be to assist the poor and also starve the funding of projects that are likely to be hurtful to society. In other words, it might sanitise the North of Nigeria.
The North of Nigeria parades the largest population of poor and backward Nigerians. How does one explain that in Borno State, for example, in this decade, only about seven per cent of the children there go to school? What is the future of the deprived 93 per cent? “Boko Haram” in my discernment, is a violent expression of disgust, bitterness and anger against the heartless infliction of abject poverty and humiliation on a people by their people who through the privilege of acquisition of Western education have become tyrants to the poor.
There is abject poverty in the North of Nigeria and their leaders have violently exploited them over the years. Prostitution is in a strong position where it is taken for granted as a normal available means of survival. In the North of Nigeria, probably until recently, no constructive battle is raged against squalor. Rare and multiple infectious diseases abound in the North where patronage of the “Boka” (native herbalist) is still inevitable and imperative.
Begging is encouraged as absolutely necessary for survival, and Fridays are set aside to promote and strengthen this dehumanising industry. Poor children begin to smoke cigarettes at 10 years old. Hard drugs circulate freely in the North of Nigeria. Child marriage is a norm; usury is a common practice as a means of further depriving the poor and needy. Most of the industries in the North still indulge in daily paid labour and such labourers earn slave wage.
Adashe known as contributions is a vital practice, almost a custom in the North of Nigeria. It is meant to assist the very low wage earners through necessity and self-discipline to accumulate funds by regular faithful and equal contributions to a united central fund. It is run on mutual agreement and trust. What you put in you earn in turns. No bank charges. You get into Adashe with a fixed project in mind. Participants are usually very faithful. It is rare to hear of a defaulter.
If Islamic Banking will help the poor entrepreneurs to start off their own businesses and progressively step out of poverty, please let it be allowed. If even not encouraged, let it be allowed to find its level in the normal Nigerian way of life and living. It will be interesting to see how the Yellow Slave Raider who I conjecture is the strength of this project, get involved faithfully in bailing out the poor and setting his captives free.
I wish the fuming hypocrites will give constructive consideration of this issue vis-à-vis the predominant plight of the millions of poor restive Almajiris in the North. Let these songs of war and the strip teasing dance by the Sharia Council and the lords spiritual be over and let them dare confront the “Destroyer”.
The greatest threat to Nigeria is the “Destroyer” that has successfully camouflaged and goes under the misnomer: “Corruption and Fraud”. I do not see how this battle against Islamic Banking can be won legally. You might change the name and accept or tolerate it, but that will simply mean hypocrisy.
There is also the indulgence in premeditated murder resulting in calculated slaughtering of Christians in Northern Nigeria. It just happened again recently on the Plateau. Is this not worthy of some fire-spitting by our lords spiritual? It would appear that the fierce battle of word between the “brethren” may have stressed them. They better deeply yawn and let the dogs continue to sleep.
Let the Islamic bank dialogue continue if it could work together for good for the learning of the greedy, selfish and arrogant Nigerians who believe that to be affluent is their exclusive right.
Adherents of Christian religion and Muslims who go to the extreme in accumulating wealth and showing it off to the poor as a means of tormenting them could learn therefrom. It could be a blessing in disguise to all. Who knows?
THE BATTLE MUST BE WAGED SEVERELY AGAINST THE DESTROYER called FRAUD and CORRUPTION. Let the lords spiritual and the Supreme Council for Sharia empty their armouries and go into full scale war not against one another but against the Destroyer starting by looking inwards and dealing with the scoundrels and cheats in their leadership cadre.
Dr. Moses Iloh , a clergyman and President of Eclectic Network, wrote from Lagos
Source: Vanguard, 12th August 2011.
Islamic banking only for North – Mutallab
BY Emma Ujah, Abuja Bureau Chief
ABUJA — The first proposed Islamic bank in Nigeria, Jaiz Bank, will operate as a regional bank, based in Northern Nigeria.
Jaiz Chairman, Alhaji Umaru Abdul Mutallab, told shareholders at the bank’s Annual General Meeting in Abuja, yesterday, that it had raised N6.5 billion to be able to operate as a regional bank under the recently released framework of Central Bank of Nigeria, CBN. A specialised regional bank requires N 5 billion capital to operate.
He said: “The regulatory framework recently released by the CBN re-enforces the concept of specialised banks recognised by the Banks and Other Financial Institutions Act with a lower share capital base. Your company will consequently operate as a specialised bank.
“The framework equally allows for the operation of regional and national banks within the framework of specialised non-interest banking.
In his remarks, Rev. Emmanuel Ikwe of Emmanuel Evangelical Church, who is also a shareholders solidarity activist, said Christians should not panic over Islamic banking.
“There is no need to panic over Islamic banking,” said Ikwe , who was Chief of Air Staff under the Gen. Yakubu Gowon regime.
According to him, shylock Nigerian bankers who give various excuses for not giving loans or give loans at rates that are very unfriendly would have a major competitor in the Islamic bank.
“When there is someone who will give me a loan at no interest, why won’t I do business with him? I will not leave such a bank and go to another bank that will give me a loan and charge 30 per cent interest and include other hidden charges. To me this is business”, he said.
Jaiz ‘s board of directors consist of Alh Mutallab as Chairman, Alh Abdullateef Adegbite, Alh. Aminu Dantata, Dr. Rilwanu Lukman, Alh Aliko Dangote, Group Cat. Usman Jibrin, rtd, Mallam Falalu Bello, Amb. Ibrahim Yerima Abdullahi, Alh. Sani Anka and Mall. Nafiu Baba-Ahmed.
The rest are: alh Tajuddeen Dantata, Alh. Ibrahim Adamu Babangida, Alh. Sarki Gwarzo, Amb. Bunu Sheriff Musa, Alh. Umaru Kwairanga, Mr. Mahbub ul Alam and Alh. Mustapha Binde who is Managing Diector.
Source: Vanguard, 12th August 2011.
Back
Islamic banking: Arrest Sharia council president now – CAN
By Segun Olatunji, Kaduna
The Christian Association of Nigeria in Kaduna State on Sunday called for the arrest of the President of the Supreme Council for Sharia in Nigeria, Dr. Datti Baba-Ahmed, for threatening that Muslims were ready to go to war over the proposed introduction of Islamic banking in the country.
The CAN Secretary in Kaduna State, Rev. Yunusa Nmadu, said in a statement that Baba-Ahmed’s comment on the issue was seditious and inciting against the government and people of Nigeria.
The statement reads, “The vile and uncouth words used by the SCSN President, Dr. Ibrahim Datti-Ahmad, on Nigerian Christians clerics and the entire Nigerian Christendom does not show that the SCSN is interested in peace and reconciliation like the Jamaatu Nasril Islam and CAN are trying to achieve.
“I call for the arrest and prosecution of Ahmad-Datti over his seditious utterances and claims of readiness to declare war on the Federal Republic of Nigeria in defence of Islamic banking.
“His claims about Muslims readiness to go to war and fight to the last drop of their blood should also be investigated.
“Northern Muslim should note that the evangelism of our Lord Jesus Christ, was completely peaceful. His major weapons were love, persuasion, tolerance to other shades of beliefs around him and the total rejection of violence in whatever guise, to the extent that he submitted himself to be killed so that mankind would be saved.
“Therefore, the seeming docility, humility and submission of Christians to the rule of law in the face of the several violence carried against them in northern Nigeria should never be taken as cowardice and stupidity, but obedience to the teachings of Christ.
“If a leader of CAN had uttered a fraction of the words Datti-Ahmed used on leaders of Nigerian Muslims and the entire Nigerian Muslims, this country would have since gone up in flames.”
“On this, I want to again state clearly that we completely stands against Islamic Banking in Nigeria.
“The utterances of the Mr. Datti clearly confirms our fear that Islamic Banking is not at all about finance and commerce. There is an insidious motive behind it.
“Christians would use every legitimate means to fight and frustrate the introduction of Islamic Banking in Nigeria.
“Islamic Banking in Nigeria would be the beginning of Somaliasation of Nigeria”, the statement says in conclusion.
Source: Punch, 9th August 2011.
Islamic Banking: Matters Arising
Indeed, avoiding the discussion of the real issues this subject raises, by accusing Nigeria’s Christian leaders of Islamaphobia, reduces the debate to a question of religion, which is regrettable and a diversion.
We cannot continue like the Ostrich to bury our heads in the sand. We must face and deal with the truth that our nation can only be built on a foundation of equity and justice.
The truth is that from the very foundation of Nigeria, there has been acceptance and an understanding, that while Nigerians are a people of multiple faiths, the Nigerian state is secular and must continue to remain so otherwise we run the serious risk of national disintegration. The founding fathers of Nigeria along with our former colonial masters recognised this and enshrined secularity in our constitutions from the very beginning.
The secularity of the Nigerian state has been compromised through a number of insidious steps such as the membership or affiliation of the state or its organs to faith based organisations.
The most notable of these was the introduction by military fiat, under the Babangida regime, of a decree which removed the word ‘personal’ from every reference in the constitution to ‘sharia personal law’. This became part of the 1999 constitution, and was the basis on which 12 Nigerian States shed their secularity to become Islamic states.
Christians have no objection to Non-Interest Banking, and indeed welcome and encourage it. However the objections being voiced are the Islamisation of it as a concept and the championing, sponsoring and driving of the very specific “Islamic Banking” by the CBN, which by our constitution is a secular body.
What CBN must now do is to issue guidelines for Profit and Loss Sharing Banking or Non-Interest Banking, and allow the various faith groups to regulate the faith based aspects of their banking services within the parameters set by CBN.
That way, the faith based aspect of banking will not be brought under CBN, thus preserving the secularity of the Nigerian state, contrary to the position under the present guidelines. It is possible to have fully fledged Non-Interest Banking in this way.
—Pastor Wale Aderafasin, National Secretary, PFN, Lagos.
Source: Vanguard, 4th August 2011.
Back
CAN President to Sharia Council on Islamic banking: Keep your war drums
*Hits Reps, says they got it wrong
*On Boko Haram: Solution lies with northerners
By Sam Eyoboka, Jimoh Babatunde & Olayinka Latona
NATIONAL President of Christian Association of Nigeria (CAN), Pastor Ayo Oritsejafor, who recently returned to the country after two weeks spiritual retreat abroad, spoke to journalists at the Murtala Muhammed International Airport, Ikeja, Lagos, on Tuesday, on the state of the nation including the vexed issue of Islamic banking and the insecurity in the nation. The CAN president says members of the House of Representatives disappointed Nigerians on their position on Islamic banking.
Excerpts…
While you were out of the country, the Central Bank of Nigeria, CBN, governor, Mallam Sanusi Lamido Sanusi, was at the floor of the House of Representatives to explain the workability of the proposed Islamic banking and, at the end of the exercise, members acknowledged the presentation with applause. What is your reaction?
This is a very serious moment for us as a nation. It’s a time I think everyone must think seriously before doing anything or saying anything. What happened at the House of Representatives was a shock I think to well-meaning Nigerians; it was a shock because an issue that has generated so much controversy, you invite a man, he comes and he explains whatever he has to you, that is his job, he’s supposed to explain.
Now, after his explanation, we would have thought that a House of Representatives is representing the people; based on that, if you are actually representing the people, you mean your people have no views on this? That a man would come, explain himself, you clap for him and you say it is over and he walks out? Does it then mean that you understood everything and it is clear to you?
We are waiting to hear clearly from the leadership of the House of Representatives. Let them defend what happened. I appeal to social activists and well-meaning Nigerians not to be quiet. They may think this is an issue they are not interested in, but tomorrow, another issue may come that they will be interested in. If this issue can be treated like this in the House of Representatives, then they should be prepared for bigger things that are going to happen in the House of Representatives. I am highly disappointed.
Let me again make it abundantly clear, we are not against Muslims, they are Nigerians. There are some Nigerians who are Muslims, some are Christians, we are Nigerians and we have known each other for years and we will always be here. I’m a bit puzzled when I listen to what is coming from different angles. We are not basically against Muslims wanting a bank that would meet their needs. You can have a bank that will meet your needs.
What we are saying is this, does the law of this country permit the CBN governor to spend state money promoting a sectional banking system? We are not against non-interest banking; after all, it started from the Bible. It is the Bible that every other person got it from. It is like someone or some persons are trying to blindfold Nigerians, but what we are against is the sectional non-interest banking.
The CBN is the CBN of Nigeria and not CBN of Northern Nigeria or of Islamic Nigeria. It’s CBN of the Federal Republic of Nigeria that comprises everybody.
Now, how do you take state funds running into billions to promote one kind of non-interest banking? That is a question that must be answered. It is absolutely wrong. Number two, why must you have one set of guidelines for Islamic banking and then probably you will now have another set of guidelines for other non-interest banking? That is wrong and discriminatory. For example, in the education sector, we have uniform guidelines for any person who wants to start a school. Today, in this country, there are universities that lean towards Islam and Christianity, nobody is quarreling with that, but do we have separate guidelines for them?
No. The ministry of education has one set of guidelines that covers the system. So, why create separate guidelines for Islamic banking? It is wrong. You are discriminating and then, you now say within CBN, you will have what is called Sharia Council of Experts, but, after a lot of pressure, we heard that he changed it to Council of Experts. Those are just words, now this Council of Experts, will it include Christians? That is the question. Who are these experts? They are Islamic experts. If you want to do non-interest banking, there are at least three or four non-interest banking, what we expect from the CBN is one set of guidelines.
The argument by the CBN is that the UK also practises Islamic banking, does the Exchequer’s Office in Britain have a Sharia Council of Experts? Islamic banking in the UK is a very small part of what goes on in the banking industry there. So, why make a big deal out of this?
I have said it again and again, Saudi Arabia is the headquarters of Muslims; we all know them for what they are and what they stand for, we are not against them; but even in Saudi Arabia, the most important industry there is the oil industry, but do they run the oil industry with Sharia banking? How are they running it? Is it not with the regular banking?
Some people say Islamic banking is practised in India, but is it Islamic banking that has made India what it is today? Let’s be honest. I repeat, we are not against Islamic banking per se, but we are against Islamic banking being separated from other non-interest banking and the CBN using state money to fund it and creating so much tension in the country. Why are they not telling Nigerians the other kinds of non-interest banking? Or is it that our CBN governor doesn’t know there are other non-interest banking? Why promoting Islamic banking and not other non-interest banking?
For instance, you don’t expect me to stop selling pork because I want to do business with an Islamic bank because, if I go there, the operations is based on Sharia law and Sharia law says you can’t touch pork; so, automatically, I’m disqualified. So, if I want to do anything with the bank, I either convert to a Muslim or close down my business. There are implications for these things and we should look deeply into them.
Nobody can intimidate me or the Church. Our children yet unborn will ask us questions and say when this thing was happening, what did you do? There are so many things that happen in Nigeria that people just look and allow.
Council of Sharia on Islamic banking and the threat of war
First of all, I’ve just returned to the country and I have not read it. So, it will be very difficult for me to respond comprehensively because what you have just said is heavy, it’s a big statement. For the Sharia Council, going by what you said, to say they are ready to go to war, is a big statement. The problem, most times, is that they say some of these things to heat up the polity, but they don’t really seem to identify those who are really heating up the polity.
If a group of people say they are prepared to go to war, won’t you also expect us to respond to that naturally? But, by the time we start responding, people will turn around to say ‘you are the ones heating up the polity’. It is difficult to comprehend; my only response to what you have said for now is that I want to assume they are misquoted. Let me settle down, give me about 48 hours, you will hear from me, but I will be surprised if the Sharia Council thinks the best way to find a solution to a problem and to bring peace to Nigeria is to declare war. Violence is not the preserve of one person, anybody can be violent and we don’t advocate that. I will never come out to say we are prepared for war, but you are hearing it now.
What is the way forward
The way forward is, first of all, the governor of the CBN should clarify that things have been mixed up. Non-interest banking is not just Islamic banking. Number two, the CBN governor should revert back to the laws and principles, the Act of the Central Bank. What I’m saying is that he should not promote one kind of banking above the other. He has to find ways to change the guidelines that he has put on ground and bring out the guidelines that work for everybody. He should simply put aside the sectional idea and embrace Nigeria as a country and give one set of guidelines for everybody.
Amnesty for Boko Haram and the threat by a Christian group to revenge the killings of Christians in the north
Don’t be surprised. No nation survives religious war. I pray that Nigeria will not get to that point that there will be a religious war. Boko Haram is not just a group that came up because of economic reason, it is purely a religious group with a religious ideology. Now, how do you give amnesty to them? Are you now going to tell them to forgo their religious belief? I don’t rule out dialogue, but I think dialogue should begin within the north itself, among the Muslim leaders. We are not hearing their voices. When we had problem in the Niger Delta, we heard a lot of Niger Deltans making noise. They even went to the extent of saying the Niger Delta was doing it to create problem for the Yar’Adua government.
But what happened in the Niger Delta was completely different. Those boys were crying out because of discrimination, because of marginalization and non-compensation for 50 years of exploiting oil from their land. You go to those places, water is no longer useful to the people, the fishes are dead. Do you know that if you go to Escravos or Burutu, fish is more expensive there than in the city? These are the places where the ocean is, where the rivers are and, yet fish is expensive. Do you also know that petrol is more expensive there than in the city? These were the things that agitated these boys.
We didn’t support the violent part of it, we were part of those that supported peace in the Niger Delta. Those in government know that. We did all we could, but did you ever hear they burnt any church or mosque through all those years or targeted the Muslim community in the south and started killing them? Nothing like that, but what we are seeing now with Boko Haram is purely a religious issue. So, like I said, dialogue should start with the northerners themselves who believe in one Nigeria.
So, what they should do is to meet with these boys and find a way to convince them about the way they are going and, while that is going on, you don’t expect government to just sit down doing nothing. I expect government to beef up security and work more on area of security.
You can’t have peace without justice and you can’t have justice without truth. It is truth that breeds justice and it is justice that breeds truth, but as long as we are not saying the truth, we will not have justice because justice feeds on truth.
First of all, government must find ways to look into the fact that the security agencies have been polarized along religious line. Let’s be honest, these are the things they don’t want people like us to say.
How on earth will bombers get into the headquarters of the police without the help of an insider? Obviously, there are people within the headquarters of the police probably even in the high ranking of the police who are of the ideology or who sympathize with the ideology. So, we have them like that in most of the security agencies and as long as these people are there, whatever the security agencies plan to do, they will leak the report to these boys and so, it makes it almost impossible to actually do much in the area of security.
So, it’s important to get other means and I can’t get into details of this to be able to pinpoint some of such people.
I also believe that we must reach out to nations that have experience in this area, but I will not mention nations, those in government know them. After all, when a terrorist attack happened in America, Europe helped and when it happened in Europe, America helped. The world has become a global village, whatever that affects one country affects the other. So, they need to seek help in the area of training and other areas.
Source: Daily Champion, 31st July 2011.
Back
Islamic Banking: Your statement falls short of expectation, Oritsejafor replies Sultan
NATIONAL President of the Christian Association of Nigeria (CAN), Pastor Ayo Oritsejafor has picked holes in a statement credited to the Sultan of Sokoto and President General of Jamatul Nasril Islam (JNI), Alhaji Muhammad Sa’ad Abubukar, saying it falls short of expectations.
Speaking in Kaduna in an opening remarks at a meeting to assess the level of compliance with the Tafsir guidelines, the Sultan, who is a co-chairman of the National Inter-Religious Council (NIREC) was quoted as saying that Islamic banking has come to stay in Nigeria and there is no need to quarrel over the issue because we shall realize what we want. I want to assure you."
Responding in a telephone interview last night, NIREC co-chairman, Pastor Oritsejafor thanked the Sultan, who he described as a personal friend, for endeavouring to speak pout at last, saying that the whole nation had been awaiting his comments on the two vexed issues of Boko Haram and Islamic banking.
"You know I respect the Sultan a great deal because he is a man who means well for the country just like some of us. We will continue to be friends because the only way this country can make appreciable progress is by stretching a hand of fellowship across the Niger and building blocks of unity for future generations.
"So, I thank him immensely for his eventual comments about the two controversial issues. However, I dare say that I was a bit surprised that the Sultan, who is respected across the country, failed to address the two cardinal issues involved in the controversial Islamic banking before he concluded that it has come to stay," Oritsejafor who just finished a NEC meeting of CAN in Abuja, stated.
For the avoidance of doubt, Oritsejafor continued, "Christians in Nigeria are not against the Muslims as people have made the generality of Nigerians to believe. WE are not against Muslims. In fact, it the Christians that have always been at the receiving end of every violence that has taken place in parts of the North.
"Let it also be known that we are not against Islamic banking per se. What we have said thus far is that there are two issues that the Central Bank of Nigeria (CBN) Governor must address properly before the introduction of non-interest banking as against Islamic banking.
"One, we have continued to frown at the way the CBN governor who is being paid by tax payers’ money is championing the course of Islamic banking in isolation of other non-interest banking. We are against Mallam Sanusi Lamido Sanusi using state funds to promote Islamic banking as though that is the only form of non-interest banking. It is against the spirit of the Nigerian Constitution.
"He should allow people who are interested in Islamic banking to use their money to sell their manifesto to Nigerians with a view to wooing them to accept that form of banking which is different from what they used to know," he said.
According to Oritsejafor, "the other issue that my very good friend failed to address has to do with the guidelines the CBN governor had put in place for the issuance of licence for non-interest banking in the country which is different from that for Islamic banking. In every sector of the nation’s economy including the education sector, there are uniform guidelines for the registration or operating license. For instance, any Nigerian applying to the National Universities Commission, NUC, for licence to establish a university, irrespective of its leanings, is required to adhere to a uniform set of guidelines before its registration. There are no rules for Islamic university and another for a Christian university.
"But the CBN governor has failed, thus far, to explain to the nation why he is putting up a different guideline for Islamic banking and another one for other forms of non-interest banking. This is in addition to a proposed establishment of a Shari’a Council of Experts to be based at the CBN to monitor the operations of the Islamic banking and we have asked; is this what operates in all the countries in the world where Islamic banking operates?"
On the activities of Boko Haram, the CAN president also picked holes in the statement credited to the Sultan, who said the state of affairs in the North Eastern part of the country should not be blamed on Boko Haram, rather that the government should fish out those behind the violence.
Oritsejafor, again thanked the Sultan for his position on the Boko Haram, saying: "If the eminent citizen has superior information, he should avail the nation’s security apparatus with such information with a view to putting a stop to the daily massacre of innocent Nigerians in that part of the country, because every Nigerian is sick and tired of the continued violence in that region and the attendant effect on the nation’s economy. For the interest of peace in every part of the country, we must, as citizens contribute our own little quota to helping government at every level to reduce the army of unemployed youths in the country."
Pastor Oritsejafor said: "These are some of the issues, among others, that one would have expected the Sultan to address to assuage the nerves of those who are opposed to the issue of Islamic banking as well as the insecurity situation in Borno State that has left hundreds of innocent Nigerians dead while their means of livelihood destroyed."
According to him, Nigeria is the only nation both Christians and Muslims have and every effort must be made to salvage it together now for the benefit of generations yet unborn.
Source: Daily Champion, 31st July 2011.
Back
The Social Variant of Islamic Banking
ONYEBUCHI ONYEGBULE
The debate on introducing Islamic Banking (IB) into Nigeria's financial system is on. Its outcome will affect people, its social implications therefore are central. This piece isn't about the good/evil, beauty/awkwardness of the scheme but it's meaning to the people and the nation they belong to.
Majority of the supporters of IB come from the north which is predominantly Muslim; its opponents come mainly from the south which is predominantly Christian. So already, there's a divide along religious lines in a secular state. The question now is, what do the people want and what does the state say? The south says, it's dangerous to make prominent a particular religion in financial operations designed to serve all faiths and more still, an affront to inscribe its impressions on the currency bill. In other words, keep religion where it belongs and money where it belongs. It's proponents argue that what's important is what IB brings to the common man not it's name. If we go the way we presently are, the economy will tilt towards polarization along religious lines and perhaps, spread to other sectors. In the end, the people whose good the plan is to serve find themselves move from beneficiaries to gladiators.
The founders of this country understood the hidden fire in our distinct diversities and proffered a secular state as the preferred extinguisher. An indicator of such social fire is polarization which is already in place. Our best response therefore, is to get the extinguisher ready. Secularity is it. We should heed it in accordance with the vision of the founders and the constitutional provision of the land. Right from the beginning, it was possible for the founders to slot in IB but they opted for caution. Then as now, the sensitivities remain strong and caution remains the answer. If we focus mainly on the benefits of the scheme, we may err because it is people at peace that talk about economic benefits. What if after defeating the opponents through organs of governance like recently in the House of Reps but they continue to see this as a belief not economy challenge and resort to other means to assert their position, where will the country be to reap benefits? I say so because violence is already in our midst and we can't pretend otherwise. Remember, we're talking about people. What rules them is perception, that is, what they think, the picture in their head.
That's what determines their response/action not necessarily the rightness/wrongness of the scheme. If that's the case, how intensive has its education/enlightenment been to improve the thriving mind-picture? What time has been given to make sure the message has been understood? Rather, what we've been hearing from the CBN-chief is comments in finality- something like, 'on Islamic Banking, no going back, no court can stop me'. Such comments, rather than throw light, point to the battle-lines with an air of arrogance. The response of the opposite party turns nothing short of resistance. By then, we won't be talking economy but security. The other question is, why push Islamic Banking with such zest at a time the nation is under threat of its corporate existence? The opponents have found it easy to relate Islamic Banking to the Islamisation drive of Boko Haram. Invariably, Sanusi is perceived as its arrowhead from the monetary end. That may not be the case but it's the picture and it determines the response.
The backside of all these is the paradoxical practice of our banking institutions. In a country where people are squeezed for borrowing to do business and banks come declaring obscene profits is to say the least, obtuse. This perhaps is the driving force behind the IB-option. But we won't in cause of fleeing from our predatory banks jump into fire. What the central bank should do for us is to see how to peg bank profits to reduce the cost of borrowing without necessarily Islamizing the system. There must be some monetary policies that address this. What's scaring is the threat of religion in our national life and Sanusi can't explain it enough that Islamic Banking isn't about Islamizing Nigeria.
Already, he is a suspect and the more he explains it, the less it's understood and if he forces it through, at some point, it'll be resisted. So why do we have to go that path? What's presently prevailing is positional reasoning- a kind of, 'my way or the highway' which ends in ego-defense without an acceptable solution. Once we're here, issue shifts from problem-solving to defending held positions with less regard for its consequences. What's needed now is a middle-ground that satisfies all parties, not perfectly but acceptably.
Source: Business Day, 29th July 2011.
Islamic banking, cash limit policies: House leadership sitting on a keg of gunpowder?
Kolawole Daniel writes on the controversy trailing the controversial Islamic banking and the cash withdrawal limit policies being proposed by the Central Bank of Nigeria (CBN) and how the issues are now threatening the unity of the House of Representatives.
Currently, all is not well with the House of Representatives, as there appears to be a crack in the lower chamber over the ‘shoddy’ endorsement of the controversial Islamic banking and the cash limit withdrawal policies being proposed by the Central Bank of Nigeria (CBN).
Criticisms had trailed the Mallam Sanusi Lamido Sanusi-led CBN’s introduction of the Islamic banking, with opinions divided among Nigerians from different walks of life on the workability of the non-interest paying banking policy. At the peak of the controversy, the leadership of the House of Representatives summoned the CBN governor for clarifications over the workability of the new banking initiative.
With the dust raised by the controversies generated over the introduction of the Islamic banking, which some Nigerians see as a move to Islamise the country, the CBN came up with yet another policy aimed at limiting daily cash withdrawal to N150, 000 and one million naira for individuals and corporate bodies, respectively.
The House resolution to summon the CBN governor was sequel to a motion moved by Honourable Aliyu Yakubu (PDP, Yobe), questioning the CBN policy on the daily cash withdrawal limit. Yakubu had averred that the proposed policy to limit daily cash withdrawals from banks, with effect from June, 2012, would affect local farmers and traders who did not have access to banks in their localities, stressing that “some communities in the country have no commercial banks, micro-finance banks or automatic teller machines (ATM)”. But the Speaker, Honourable Aminu Tambuwal, who presided over the plenary, asked the former chairman of the House Committee on Banking and Currency, Honourable Ogbuefi Ozongbachi, to give the House a direction on the matter.
Addressing the House, Ozongbachi said that the best thing to do was to summon the CBN governor to address the lawmakers on the viability of the policies being proposed by the apex bank. Speaking further, he said such a move would put the policies in a proper perspective and help the House to take the right position on the two issues.
With the resolve by the House to have Sanusi appear before it on July 21, members and Nigerians, indeed, waited anxiously to hear from the CBN governor on the workability of the two policies. On the D-day, Sanusi and his array of staff stormed the National Assembly with documents and Powerpoint presentation, all in the bid to convince the lawmakers that the two policies were in the best interest of the country and its people.
As Sanusi and his crew got set to address the members, the Speaker was conspicuously missing in the hallowed chamber, but his deputy, Honourable Emeka Ihedioha, was on hand to preside over the sitting for the day where the CBN governor was listed on the Order Paper to address the House on the policies.
However, it took the Deputy Speaker and some key members of the House some time before they could allowed the CBN governor to enter the hallowed chambers and it took the Deputy Speaker almost 25 minutes before he could give him the go-ahead with his presentation, as members were coming to him for consultations on the mode and manner which the process should take.
When he was finally allowed to address the House, as expected, Sanusi strongly defended the two policies being proposed by the CBN, telling the members that people from the South East, the zone where the Deputy Speaker hailed from, had been patronising Islamic banks outside the country. He specifically cited Enugu State as a state that had borrowed money from the Islamic Development Bank (IDB). Sanusi explained that the Non-Interest Financial Institution (NIFI), otherwise known as Islamic banking, was defined as bank or other financial institution which transacted business, engaged in trading, investment and commercial activities, as well as provided financial services in accordance with any established non-interest banking principles. He also informed the lawmakers that, “non-interest banking is an alternative form of financial intermediation that is based on the profit motive as it is market-driven, but with a moral dimension.” He added that one of the largest Islamic banks in the world, Jahis Bank, had a Nigerian from Anambra State as its second largest shareholder and who is the only landlord that volunteered to offer him (Sanusi) a four-storey building that he could use for an Islamic bank in Nigeria.
According to him, out of the 10 companies in Nigeria that had obtained loans from the non-interest bank, nine are owned by Christians. He stressed that Nigeria membership of the board of the Islamic Development Bank was increased from three to four by the former President Olusegun Obasanjo administration. He also noted that banks like Intercontinental Bank, United Bank for Africa and Chartered Bank had sought approval from the CBN for Islamic banking in line with best practices, while Bank PHB had commenced window Islamic banking since 1999.
The CBN governor described Islamic banking as a product which should not be associated with religion because it was now universal, and pointed out that his predecessor, Professor Chukwuma Soludo, approved, in October 2008, the process of commencing Islamic banking in Nigeria and set the motion in 1991.
Sanusi, who quoted extensively from Section 66 of the Banks and Financial Act of 1991, said it clearly recognised the functionality of a non-profit making bank, provided it did not promote the sponsoring of breweries, casinos, prostitution and sale of alcohol. He further explained that, “the guidelines of the CBN ban discrimination on any ground. Non-interest banking is available in 75 countries of the world, including Britain and the United States. The CBN is not setting up Islamic bank, but setting the guidelines. We cannot license banks for non-interest banking without setting the guidelines.”
The Nigerian apex bank governor also described reactions against the Islamic banking as emotional, due to what he described as lack of understanding, and assured that the CBN would do a memo to the Minister of Finance, Dr Ngozi Okonjo-Iweala, to go to Asia and borrow five billion naira for the infrastructural development of Nigeria because, according to him, there is a lot of money available there in the non-interest banking sector. “Those who are opposed to this are the elite. This tendency to view national issues as ethnic and religious will not help Nigeria. Non-interest banking has nothing to do with religion. I do not want this to be a religious but financial discussion”, he said.
On cash withdrawal limit, Sanusi explained that the CBN never limited the amount of cash that people could withdraw, but that if anyone decided to withdraw more than N150,000 or one million for an individual and corporate organisation respectively, they would have to pay a cost for the withdrawal. He noted that, “99 per cent of those who spoke against it have never read the circular because that is a small unit of a comprehensive cash package under the payment system transformation. Lagos will become cashless in December because we cannot be talking of being among the 20 developed nations of the world without this. It is all about ambition. Those complaining are the rich and not the poor”. He also said that Nigeria had, several times, risked being blacklisted for money laundering because of the rate of cash movement in the country, and reminded the lawmakers of the anti- money laundering law that they passed, which he said was not being implemented.
He also quoted Section 1 of the Money Laundering Act of 2004 which sets the threshold for cash payment transactions outside the cash payment for transactions outside the financial institution (N500,000.00 for individuals and two million naira for corporate bodies) to ensure audit trail as a disincentive against money laundering. Sanusi, who was intermittently applauded by some members of the House of Representatives while making his presentation, said that cash withdrawal policy was targeted at the reduction of cash transactions in the banking industry in favour of electronic means of payment.
Cash management alone in the country, he said, attracted as much as N200 billion annually, explaining that the proposal was not to place limit on cash transactions, but to provide that the 10 per cent of customers that made high volume cash transactions would bear the associated cost. Cash withdrawal limit, if allowed to take off, he added, would have a direct impact on banking industry efficiency and cost structure, saying that reducing the cost of cash to the financial system would result in significant savings that could be passed on to customers in the form of reduced cost of banking services and lower lending rates to borrowers.
After the CBN governor’s well articulated explanation on the two policies being proposed by the apex bank, Honourable Ihedioha thanked Sanusi for enlightening the members on all the grey areas of both policies and pleaded with his colleagues not to ask questions, saying that the invitation was almost cancelled due to the death of the chairman of the National Assembly Service Commission , Alhaji Aliyu Dogondaji, who died in the early hours of July 21.The Deputy Speaker added that the Speaker had to travel to Sokoto for Dogondaji’s burial according to Islamic rites, noting that he only allowed the CBN governor to address the House due to the busy nature of his office and called for a motion for the close of business of the day.
This development, however, irked some of the lawmakers who had questions or reservations on the CBN policies, with some of the lawmakers staging a walk out in protest against the Deputy Speaker’s decision. Some members are questioning why the Deputy Speaker shielded the CBN governor from being questioned after his presentation, unlike it was the case of the Petroleum Resources Minister, Mrs Deizani Alison-Madueke, who was subjected to several hours of questioning, along with the Group Managing Director of the Nigeria National Petroleum Corporation NNPC, Eng Austin Oniwon, and the Director of Department of Petroleum Resources (DPR) by the House. But political pundits are of the view that there is more than meets the eye in the Deputy Speaker’s action, as some adduced it to the past experience that the last National Assembly had with Sanusi over the controversial jumbo pay of the lawmakers.
Already, there is apprehension in the House over the shoddy way its leadership handled the invitation of Sanusi over the proposed policies of the CBN, as some members are reportedly spoiling for war with the leadership of the House. It was leant that a majority of the members had resolved that the CBN governor should be invited again to appear in the hallowed chamber to give more explanation on the grey areas being agitated against by Nigerians, which necessitated his earlier invitation.The aggrieved members, it was further learnt, had been mounting serious pressure on the Speaker on the need for Sanusi to re- appear before the House to enable members to ask questions, at the end of which the House would take a final position on the matter, rather than just applauding him and giving him a clean bill as was done last week.
Honourable Tajudeen Yusuf (Kabba/Bunnu/ Ijumu Federal Constituency, Kogi State), while expressing his view on the CBN proposed policy. said, “Of a truth, I see nothing wrong with the policy; with the little I know by my background as an economist, I know that non- interest bank means a bank you can go to seek facility without interest, but what happens is that you share profit and you share loss.
“The only thing is that the CBN has not done enough to educate Nigerians, realising the fact that Nigeria is a country where religion is not something you can just gloss over. What really agitated Nigerians is the idea of an Islamic banking and people are apprehensive about that. But I think the CBN really needs to go to the market place and educate Nigerians on the concept of non-interest banking system.You can have a good product, while your approach to it kills it. So, what the CBN must do is a lot of enlightenment; people must be educated and well informed,’’ he noted.
Speaking in the same vein, Honourable Zakari Mohammed (Baruten/Kaima Federal Constituency, Kwara State) declared that the policy should be seen as a product, rather than a religious issue, since many advanced countries were operating non- interest banking.
On his part, Honourable James Abiodun Faleke (Ikeja Federal Constituency, Lagos State) said that the idea of the non- interest banking was good but the name given to it was wrong, and advised the CBN to do something about that before the issue got out of hand. But Honourable Nathaniel Agunbiade (Obokun/Oriade Federal Constituency Osun State) was of the view that the House had not approved the proposed policies, noting that the CBN governor was only invited to explain the policies after which the House would discuss it and make its position known.
With opinions divided among Nigerians and crisis brewing in the House over the proposed policies, will the CBN do the needful by enlightening Nigerians properly on its controversial policies that is now a bone of contention, or still go ahead with the policies without a recourse to those that are against the policies?
Source: Tribune, 29th July 2011.
Back
The Politics Of Islamic Banking System
BAYO OLADEJI
When the debate on the Islamic Banking started, little did those that set the ball rolling foresaw a situation where the unity and the corporate existence of Nigeria would be at stake. But now with a war signal coming from one of the stakeholders, it is high time the Presidency intervened, BAYO OLADEJI reports.
Nigerians are always in love with controversies and it is almost impossible that a week would go without one burning issue or the other in the front burner for a public debate either for counterfeit or genuine reasons. The most unfortunate thing about these debates, is each is always at the expense of the corporate existence of the country even as each camp is intolerance of dissenters.
Today, one of the on-going debates in the polity is the proposed Islamic Banking which has polarized the country along religious line and each camp is threatening fire and brimstones if its position is not adopted.
The proponents of Islamic Bank have the soft-spoken Governor of the Central Bank,Sanusi Ado Sanusi, who few days ago was on the floor of the House of Representatives debating with self on the good sides of the banking system.
According to Sanusi, Islamic banking was not a new product, since it had been introduced over 35 years ago in over 75 countries and spreading over 435 institutions in United States of America, the United Kingdom, Luxembourg, Malaysia, Singapore, South Africa, Uganda, Senegal, Kenya, Gambia, among other countries.
To buttress his point, he listed DOW Jones, NASDAQ, FSTE and Hang Seng as some capital markets that currently operate Islamic financial products in their daily transactions.
Sanusi informed the House that licences for Islamic banking had been issued in Nigeria to some banks as far back as 1991 when the Banks, Insurance and other Financial Institutions (BOFIA) Act was amended.
Citing an internal memo of the CBN, which he brandished during his presentation, the CBN boss said that the first application to open an Islamic bank was received between 1991 and 1993 from Alquida and Albarka banks, while an approval to open an interest-free bank window was given to Habib Bank in 2004. The approval to open Islamic banking window, he maintained, was given by his predecessor, Professor Charles Soludo, on October 28, 2008, for Intercontinental Bank, United Bank for Africa, Standard Chartered Bank and Habib Bank. Sanusi said it wasn’t his initiative as the process began six months before he assumed duty as CBN governor, under the tenure of Prof. Soludo with majority of directors of the CBN who are Christians.
According to him, the CBN Financial System Stability Committee had Professor Soludoas chairman, deputy governor Tunde Lemo, a Christian and a pastor while Dr. Kingsley Moghalu, another Christian, was later brought from Geneva to work with the CBN. Sanusi named a director, Christian Chukwu, as one of the proponents of Islamic banking, even as he noted that the idea was embraced by Anambra State which took a loan from the bank.
However, despite the impression being created by the media reports concerning the acceptability of the proposed banking system, some members of the House have come out to fault this even as they accused the Speaker, Hon. Aminu Tambuwal of bias by not putting the outcome to voting. Among those expressing this position are the Minority Whip, Hon. Samson Osagie, Hon Uche Ekwunife and Hon. Adeola SolomonOlamilekan.
But the unofficial spokesman of the opposition, the highly respected fire spitting cleric, Pastor Ayo Ortsajafor has taken the lawmakers to the laundry for this new development and asked them to withdraw support for the project that might doom whatever reminant of the unity of the country.
Explaining the position of the Christian Association of Nigeria (CAN) the cleric said, “We are not against Muslims. Muslims are our brothers and sisters. Nigeria is a nation that has both Muslims and Christians. It doesn’t matter what we say, Muslims will always be here. It doesn’t matter what Muslims think, Christians will always be here. We might as well accept each other and be happy, because that’s the reality. So, we appreciate them and wish them well. The problem is this; what does the original CBNAct say about non-interest banking? The original thing does not specify Islamic banking. I don’t know why the CBN governor is kind of twisting things in a way to confuse Nigerians. The original provision is just non-interest banking.
“Islamic banking is just one kind among many other kinds of non-interest banking. So, why would CBN, an organization, an institution that represents the Federal Government, that is an institution that represents all Nigerians zero in on only on one kind of non-interest banking. This is the problem with Sanusi and his idea.
“In education, there is only one set of guideline for those who want to establish schools. The Ministry of Education or any other institution charged with the responsibility in Nigeria will not come out with Islamic guideline, Christian guideline, or native doctor guideline. It’s only one basic, level playing field guideline for education.
You want to start a school, you take the guideline, vis-à-vis your belief, to go and start. We have Islamic universities in Nigeria. We have Christian universities. Do they have different guidelines? They all have the same guidelines. This is what we are saying. Now, the guidelines for non-interest banking has been changed two or three times,”Oritsejafor stated.
While this was going on, a new dimension was added on Sunday when the Supreme Council for Sharia in Nigeria (SCSN) in a statement declares its readiness to go to war if the proposed Islamic Banking system is aborted even as it warns Christian clerics to watch their tongues!
Speaking through its President, Dr. Ibrahim Datti Ahmed, the group disclosed that Muslims would defend the implementation of the Islamic banking system “with the last drop of their blood” as it called on the Federal Government to call Christian leaders to order over their opposition to the project.
According to the council, “Jaiz bank has come to be and there is nothing they can do about it and if we have to go to war on this, we’ll go to war. let those wearing cassocks stop disturbing our peace…being peaceful doesn’t mean we are cowards. we warn them to stop disturbing our peace if they want us to live together in Nigeria. everybody can go his way; we don’t have to live together. we cant live under people dictating to us how we should live our lives even within the laws of the country…”
Speaking on the new development, a top Presidency official said, “It is regrettable that our religious leaders do not weigh their utterances before releasing them to the air. As the representatives of God, it behoves them to watch their utterances and to be conscious of the implication of every statement they make. We cannot afford fighting another war in this country again. Okay. imagine this scenario, if the group that was beating the drum of war were to be invited and cautioned those involved would begin castigating the Federal Government of intolerance and if we are to live them doing nothing, other side would be accusing us of being bias. As you know religion is a very sensitive matter.”
Speaking further he appealed to the two sides to shealth their swords and allow peace to reign in Nigeria adding, “It is when there is peace that we could enjoy the gain of this Islamic banking system.”
Interestingly, it is not all Christian leaders that are taking sides with the CAN position, for example, speaking in a sermon last Sunday in his church, Latter Rain Assembly, in Lagos, Pastor Tunde Bakare, the Presidential running mate to GeneralMuhammadu Buhari of the Congress for Progressive Change (CPC) has distanced himself from the criticism of the banking system by Christian leaders, stressing that even though it was christened as Islamic banking, its legality or otherwise remained sacrosanct so long as it operates under the arm-bit of the law creating it even as he argued against those who alleged that the banking could lead to islamise the country.
Instead, he said people were free to practise any religion he or she so desires, explaining that he himself could not impose his own belief on his children if they choose not to follow the Christian faith. Bakare said he had been to Dubai and Bahrain and witnessed developments in those countries.
According to him, “Islam is not the problem but the greed of our leaders. I have been to Bahrain, they practice Islam there and there is progress. If they are practising Islam here and there is no progress, then they are practising worselam.”
But in his own view, Rev.Joseph Hayab, the Special Adviser to Governor Yakowa said if the Governor of the Central Bank of Nigeria, Mallam Sanusi Lamido Sanusi goes ahead with the establishment of the bank, it was likely to cause serious problems because some people may hijack it to cause crisis.
“The issue of Islamic banking or non interest banking is not new. We have people who sought for such license in the past, but the question people are asking is, why attaching it to faith?
“Non interest banking is okay, but when you attach it to faith, it is just like the manner Sharia came up. Sharia was propagated and championed by someone in the seat of power, so people misunderstood it. “If some Muslims out of their desire to promote and champion the cause of Islam and decided to gather money and open Islamic bank, there is no problem. But if it is the sitting Governor of the Central Bank that is spearheading it and insisting that it must be, then people will start asking questions,” he said.
A top government official who sought for anonymity expressed reservation over the bank because of the position of the CBN Chief, Sanusi. Hear him, “Honestly speaking, the CBN Governor should be held responsible for the controversy arising over the Islamic Bank. It was Sanusi who has been projecting the project. Why? Why can’t he allow those who secure the licence do that? What is his business taking side on the matter when he is supposed to be an adjudicator? Now, he has lost the cedibility of doing that because people now see him as the mastermind of the project. In fact, in my Ministry, somebody alleged that Sanusi and a highly placed Nigerian originated the idea when they were together at the helms affairs of the First Bank. How could we fault this allegation?”
An Abuja based Pastor accused the Christians who are the stakeholders in the banking sub-sector of greed and selfishness. According to him, “The interest rate in Nigeria seems to be among the highest in the world and this is why people are looking for the alternative. If they had allowed God to influence the way they run this sytem, nobody would have thought of this controversial bank. Although I totally disagree withSanusi with the way he is going about his campaign. For example, he refers to one of his deputies, Lemo, as a pastor. Does he call him a pastor in the office? This is nothing but blackmail and it can not work.”
From all indications, the Presidency is now in a dilemma whether to allow the project to go on or to stop it. Whichever way the pendulum swings, the unity of the country would be at stake. President Goodluck Jonathan is expected to intervene in the matter before it is too late.
Source: Leadership, 28th July 2011
Back
No One Has Monopoly Of Violence, Oritsejafor Tells Shariah Council
As the Supreme Council for Sharia in Nigeria (SCSN) has said that Nigerian Muslims would rather go to war than give up the quest for Islamic Banking, the president of the Pentecostal Fellowship of Nigeria (PFN), Pastor Ayo Oritsejafor, has stated that violence is not the preserve of one person.
Oritsejafor, who addressed the press yesterday at the general aviation terminal (GAT), Lagos on arrival from a trip overseas, said that if a group of people advocate violence, they should not expect others to fold their arms.
“Let me tell you this, nobody can intimidate me or the Church. There are so many things that just happen in Nigeria that people just allow. Now, if a group of people say they are prepared to go to war, won’t you also expect us to respond to that naturally? But by the time we start responding, people will turn around and say ‘you are heating up the polity’. It is difficult for me to comprehend; my only response to what you have said for now is that I want to assume they were misquoted.
“But I will be surprised if the SCSN thinks the best way to find a solution to a problem and to bring peace to Nigeria is to declare war. Violence is not the preserve of one person, anybody can be violent and we don’t advocate that. I will never come out to say we are prepared for war, but you are hearing it now. Let me settle down, you will hear our response and they will also get our response. We love Nigeria,” he declared.
The PFN president explained that no one is against the Muslims wanting a bank that would meet their needs, but that it is wrong for the governor of the Central bank of Nigeria (CBN), Sanusi Lamido Sanusi to spend state funds promoting a sectional banking system.
“We are not basically against Muslims. You can have a bank that will meet your needs. What we are saying is this, does the law of this country permit the CBNgovernor to spend state money promoting a sectional banking system? We are not against non-interest banking; after all, it started from the Bible. It is the Bible that every other person has imitated. You see, it’s like someone or some persons are trying to blindfold Nigerians, but what we are against is the sectional non-interest banking.
The CBN is the CBN of Nigeria and not CBN of northern Nigeria or of Islamic Nigeria. It’s a CBN of the Federal Republic of Nigeria that comprises everybody. Now, how do you take state funds running into billions to promote one kind of non-interest banking? That is a question that must be answered. It is absolutely wrong,” said Oritsejafor.
Reacting to the call for amnesty for the members of the violent Boko Haram religious sect and the threat by a Christian group in the North to retaliate the killings of Christians in that region, the clergyman prayed the situation would not degenerate into a religious war.
“No nation survives a religious war. I pray that Nigeria will not get to that point. BokoHaram is not just a group that came up because of economic reasons, but is purely a religious group with religious ideology. How do you now give amnesty to them? Are you going to tell them to give up their religious beliefs? The only way I think you can do this - I don’t rule out dialogue, but I think dialogue should begin within the North itself, among the Muslim leaders. We are not hearing their voices. When we had problems in the Niger Delta, we heard a lot of Niger Deltans shouting and making noise,” he said.
Source: Leadership, 27th July 2011.
Oritsejafor replies Sharia Council
...Says ‘violence is not the preserve of one person’
By UCHE USIM
President, Christian Association of Nigeria (CAN), Pastor Ayo Oritsejafor, said yesterday that a report credited to the Sharia Council over Islamic banking was inciting.
Speaking with reporters at the Murtala Muhammed International Airport, Ikeja, Monday evening, Oritsejafor said nobody or group had monopoly of violence.
The Sharia Council had threatened to go to war if the proposed banking system was dropped. The Sharia Council’s report was published in national dailies on Monday.
The CAN boss called for caution in dealing with religious issues, stressing that no country survives a religious war.
He, however, said it was likely that the Sharia Council was completely quoted out of context, calling for retraction of the statement to put records straight.
Oritsejafor said he should be given at least 48 hours to meet with stakeholders and deliberate on the controversial issue, adding that the council would soon get a response from CAN.
“First of all, I’ve just returned to the country and I have not read it. So, it will be very difficult for me to respond comprehensively because what you have just said is heavy, it’s a big statement and these are the kinds of things we say. Now, for Sharia Council to say they are ready to go to war is a big statement. You see, the problem is that they say some of us heat up the polity but they don’t really seem to identify those who are really heating up the polity.
“If a group of people say they are prepared to go to war, won’t you also expect us to respond to that naturally? But by the time we start responding people will turn around and say we are the ones heating up the polity. It is difficult for me to comprehend; my only response to what you have said for now is that I want to assume they are misquoted.
“Let me settle down. Give me about 48 hours, you will hear from me but I will be surprised if the Sharia Council thinks the best way to find a solution to a problem and to bring peace to Nigeria is to declare war. Violence is not the preserve of one person, anybody can be violent and we don’t advocate that,” he said.
Oritsejafor also called on the Governor of Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi to jettison the Islamic banking model now and rather promote other forms of non-interest banking as stipulated in the CBN Act.
He said the Islamic banking would never favour someone whose business line is un-Islamic.
“You don’t expect me to stop selling pork because I want to do business with an Islamic bank because if I go there, the operation is based on Sharia law and the Sharia law says you can’t touch pork and automatically, I’m disqualified. So, if I want to do anything with the bank, I either convert to a Muslim or close down my business.
There are implications to these things and we should look deeply into them.
“Let me tell you this, nobody can intimidate me or the Church. Our children yet unborn will ask us questions that when this thing was happening what did we do? There are so many things that just happen in Nigeria that people just look and allow,” Oritsejafor stated.
The Supreme Council for Sharia in Nigeria (SCSN), at its meeting on Sunday, stated that Muslims in the country would rather go to war rather than give up the quest for Islamic banking.
Speaking through its President, Dr. Ibrahim Datti Ahmad, the council warned Christian clerics to drop their opposition to Islamic banking, saying that Muslims in the country were ready to defend the idea with the last drop of their blood.
“We are very happy that with a lot of efforts Jaiz Bank has now become a reality. The company owning Jaiz has assured us that the bank is coming in September and they have assured us that they will be starting with three branches; namely Abuja, Kaduna and Kano. And they will continue to open branches rapidly, thereafter. We are aware of the amount of noise and nonsense we hear from the Christian clergy, some of whom are so ignorant that they are not even worth to be called clergymen,” Ahmad had stated during the first reaction of the council to criticisms trailing the proposed interest-free bank.
Source: Sun, 27th July 2011.
Back
‘Blame Sanusi For Islamic Banking Controversy’
Some lawyers yesterday blamed the controversy generated by the planned introduction of non-interest banking to Nigeria on the Central Bank Governor,Mallam Sanusi Lamido Sanusi.
A former President of the Nigerian Bar Association, Mr Olisa Agbakoba (SAN), and anEnugu-based lawyer and politician, Chief Maxi Okwu, said that Sanusi approached the issue wrongly.
In separate interviews, the lawyers told the News Agency of Nigeria (NAN) in Lagos that non-interest banking was good but was not presented properly by Sanusi.
Agbakoba added that the CBN governor did not tackle the controversy in time.
“The CBN ought to have communicated the process better to Nigerians.
“The issue of Islamic banking could have been better received by Nigerians, if the apex bank tackled the misconceptions from the outset.
“The majority of Nigerians, especially Christians, interpreted it the way it suited them and this could have been avoided,” Agbakoba said.
The former NBA president said that non-interest banking had many advantages.
“I am a Christian but I will open an account there once it kicks off,’’ he said.
In his reaction, Okwu said that Nigeria did not need the controversy in view of recent security challenges.
“The CBN governor should have known that with the security situation in Nigeria over Boko Haram and past experiences with Sharia, any programme with Islamic connotation will create such a controversy,” he said.
Okwu pointed out that Sanusi should have referred to the issue as non-interest banking instead of Islamic banking, to suit Nigeria’s diversity.
However, social critic and lawyer, Mr Bamidele Aturu told NAN that the controversy was uncalled for.
He said that those fuelling the controversy were causing confusion for Nigeria.
He noted that such non-interest banking was not compulsory for any citizen.
“Those against it have the option of banking with the regular banks,” Aturu said.
Source: Leadership, 28th July 2011
Islamic Banking - Christians Not Against Islam, Says Oritsejafor
By Chris Agabi
Lagos — president of the Christian Association of Nigeria (CAN), Pastor Ayo Oritsejafor, has said that Christians are not against Muslims but the ideology behind Islamic banking.
Oritsejafor, also Preseident, Pentecostal Fellowship of Nigeria (PFN), who addressed the press yesterday at the general aviation terminal (GAT), Lagos said the Central Bank should sit back and review the guidelines on non-interest banking to make it less Islamic inclined.
"What I'm saying is Lamido Sanusi must not and should not as the CBN Governor promote one kind of banking above the other. He has to find ways now to go and change the whole guidelines that he has put on ground and bring out a uniform guideline that works for everybody and tell Nigerians that, this is the guideline that works for non-interest banking," he said.
"Anybody who is interested in non-interest banking should apply. That is the statement we will like to hear from the governor of the CBN. He should simply put aside the sectional idea and embrace Nigeria as a country and give us one set of guidelines for everybody," he noted, pointing out that the recent statement from the Supreme Council for Sharia in Nigeria (SCSN) threatening to go to war was rather unfortunate.
The PFN president explained that no one is against the Muslims wanting a bank that would meet their needs but that it is wrong for the governor of the Central bank of Nigeria (CBN), Sanusi Lamido Sanusi, to spend state funds promoting a sectional banking system.
"We are not basically against Muslims. You can have a bank that will meet your needs. What we are saying is this, does the law of this country permit the CBN governor to spend state money promoting a sectional banking system?"
Source: Daily Trust, 27th July 2011.
Back
We’ve not endorsed Islamic banking -Reps
Written by Jacob Segun Olatunji and Kolawole Daniel, AbujaWednesday, 27 July 2011
THE House of Representatives on Tuesday made a U-turn over its purported endorsement of the controversial Islamic banking and cash withdrawal limit policies being proposed by the Central Bank of Nigeria (CBN) after discussing the issue at an executive session that lasted about one hour.
The executive session, Nigerian Tribune learnt, was stormy as members reportedly spoke extensively and reviewed last Thursday’s meeting with the CBN governor, Mallam Sanusi Lamido Sanusi, during which members who had raised their hands to ask questions from the apex bank’s boss were not allowed to do so by the Deputy Speaker, Honourable Emeka Ihedioha, who presided over the session.
After the CBN governor’s presentation, the Deputy Speaker had said that the purpose of the briefing was to give Mallam Sanusi a platform to shed light on the controversy that surrounded the two policies, adding that the CBN boss had done so to the satisfaction of the House.
However, briefing newsmen, on Tuesday, after the plenary on the issue, the House Chairman, Ad hoc Committee on Media and Publicity, Honourable Opeyemi Bamidele, along with other members of the committee, declared that the House had not endorsed both policies being proposed by the apex bank as alleged, saying that, “we have not taken a position on it; the matter is alive; it is ongoing. We will further debate it and take a final decision based on the interest of the people who elected us.”
According to him, “the House of Representatives of the Federal Republic of Nigeria has not, by any means, endorsed Islamic banking, the CBN governor was invited based on a motion on the two issues, Islamic banking and cash withdrawal limit to come and offer more explanations on the issues before we take a final decision. There are no standard rules that questions must be asked whenever anybody or organisation is invited. We either ask questions or ask the person to take a bow and go.”
Honourable Bamidele said that the House, in its wisdom, resolved not to ask questions after the presentation by the CBN boss in the overall interest of the nation, as such questions might degenerate into crisis.
He said: “We have acted in the overall interest of Nigeria, because Nigeria today does not need further overheating. Asking questions after the presentations that day may lead to another thing. Only God knows what would have happened by now, if members had been allowed to ask questions. At least, we had more than 100 hands up for questions. We were all on the floor of the House today when an honourable member read a letter from the Anambra State governor and the state Commissioner for Finance clarifying that Anambra State government has not borrowed any money from Islamic bank.”
“We don’t want to play to the gallery or into the hands of anybody; the matter is alive. We will not allow ourselves to be distracted. As a responsible House, we will take appropriate decision on the two issues at the appropriate time. That is why we have various committees in the House to handle such issues,” he said.
Honourable Bamidele agreed that there were some members who were not happy with what happened when the CBN governor came to address the House and was allowed to go without subjecting him to questions as it was done during the invitation of the Petroleum Resources Minister, Mrs Diezani Alison-Madueke, who was subjected to several hours of questioning along with the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr Austin Oniwon and the Director of Department of Petroleum Resources (DPR) by the House, as he said that the two issues were different.
According to him, while the issue of kerosene scarcity, which prompted the invitation of the minister alongside other stakeholders was immediacy, the issue of Islamic banking and the cash withdrawal limit was an ongoing process and did not demand any urgency as the CBN itself was still on the drawing board trying to work out the policies.
Source: Tribune, 27th July 2011.
Back
Islamic banking: Reps deny backing Sanusi
BY BEN AGANDE & EMMA OVUAKPORIE
ABUJA — The House of Representatives, Tuesday, denied that it has thrown its weight behind the Governor of the Central Bank of Nigeria, CBN, Mallam Sanusi Lamido Sanusi, over his policy to introduce Islamic banking in the country, saying no decision had been taken by the House on the matter.
There were reports in some national dailies (not Vanguard) that the House of Representatives had given its support to the controversial policy of Islamic banking being proposed by the apex bank.
This came on the heels of denial of the claim by the CBN governor that the Anambra State government had received credit facilities from the Islamic bank.
Sanusi had appeared before the House of Representatives last week where he defended the policy of Islamic banking as well as the CBN decision to limit the daily withdrawal of cash to N150,000 for individuals and N1 million for corporate bodies.
Addressing a press conference after an executive session of the House yesterday, Chairman of the ad-hoc committee of the House on Media and Publicity, Hon. Opeyemi Bamidele, said reports in the newspapers did not reflect a true representation of what transpired in the House.
He said: “The House of Representatives has not by any means and on whatsoever ground endorsed Islamic banking. The Governor of the Central Bank of Nigeria was invited to provide explanation on two policy issues that we felt were in the over-riding interest of the nation.”
He said the final decision of the House on the contentious Islamic banking and the limit on cash withdrawal would be determined by the prevailing national interest, noting that it was not under obligation to toe the line of the executive in its policies, adding: “We will not play to the gallery.”
Source: Vanguard, 27th July 2011.
Reps back out of Islamic Banking
From JAMES OJO, Abuja
Wednesday, July 27, 2011
The House of Representatives yesterday made a volte face denying supporting the introduction of Islamic banking in the country as proposed by the Central Bank of Nigeria (CBN).
The Governor of CBN, Sanusi Lamido Sanusi was last week summoned to the floor of the House to educate and clear the controversies generated by the plan to introduce Islamic banking in the county.
After about one hour lecture, members clapped for Sanusi, while efforts of some members to ask pertinent questions were rebuffed by the Deputy Speaker, Emeka Ihedioha, who presided over the plenary.
But at resumption of plenary yesterday, the House who gave Sanusi a thunderous ovation made a U-turn over its purported endorsement of the controversial Islamic banking and cash withdrawal limit policies.
The decision to reverse itself was, however, taken at an executive session that lasted about one hour and presided over by Ihedioha.
It was gathered that members who were shut out of asking questions last week took advantage of the closed door meeting to vent their anger.
A member confirmed that the meeting was stormy as members reportedly spoke extensively against the handling of last Thursday’s meeting with the CBN governor, during which members who had raised their hands to ask questions from the apex bank boss were not allowed to do so.
Briefing the press after the plenary on the issue, the House Chairman on Ad hoc Committee on Media and Publicity along with other members of the committee, Opeyemi Bamidele declared that the House had not endorsed both policies being proposed by the apex bank as alleged.
“We have not taken a position on it. The matter is alive, it’s ongoing, we will further debate on it and take a final decision based on the interest of the people who elected us.
“The House of Representatives of the Federal Republic of Nigeria has not by any means endorsed the Islamic bank. The CBN governor was invited based on a motion on the two issues, Islamic banking and cash withdrawal limit to come and offer more explanations on the issues before we take a final decision. There is no standard rule that questions must be asked whenever anybody or organisation is invited. We either ask questions or ask the person to take a bow and go.”
Mr. Bamidele, a member of the Action Congress of Nigeria (ACN) from Ekiti State added that the House in its wisdom resolved not to ask questions after the presentation by the CBN boss in the overall interest of the nation as such questions might degenerate to crisis.
“We have acted in the overall interest of Nigeria because Nigeria today does not need further overheating. Asking questions after the presentations that day may lead to another thing. Only God knows what would have happened by now if members had been allowed to ask questions, at least we had more than 100 hands up for questions.
“We were all in the floor of the House today when an honourable member read a letter from the Anambra State governor and the state commissioner of finance clarifying that Anambra State government had not borrowed any money from the Islamic bank.”
“We don’t want to play to the gallery or into the hands of anybody. The matter is alive, we will not allow ourselves to be distracted. As a responsible House we will take appropriate decision on the two issues at the appropriate time. That is why we have various committees in the House to handle such issues.”
He, however, agreed that there were some members who were not happy about what happened when the CBN governor came to address the House and allowed to go without subjecting him to questions as it was done during the invitation of the Petroleum Resources Minister, Mrs. Deizani Alison-Madueke who was subjected to several hours questioning.
along with the Group Managing Director of the Nigeria National Petroleum Corporation NNPC, Austin Oniwon and the Director of Department of Petroleum Resources, DPR by the House, adding that the two issues were different.
Source: Sun, 27th July 2011.
Back
Reps Deny Endorsing Islamic Banking
Adesuwa Tsan, Gloria Ezeiru, And Edebge Odemwinge
Apparently moved by reactions to their perceived approval of Islamic banking and cash withdrawal limit policies as proposed by the governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, members of the House of Representatives have denied that they ever endorsed the policies.
The governor of CBN last Thursday honoured a summon's by the lawmakers to explain what the two policies were about with a view to educating them more on the modalities and processes involved.
After Sanusi's long speech on the policies, the legislators had applauded him on his presentation before the deputy speaker, who presided on that day, asked him to take his leave, thereby leaving out any question or contribution from his colleagues.
"A number of us or all of us are satisfied with your presentation, we are better enlightened on the issues," the deputy speaker, Hon Emeka Ihedioha, had stated.
But during yesterday's plenary session, the lawmakers raised objections to reports that they had endorsed the policies as explained by the governor, noting that all they had done was listen to his explanation without taking a definite stand.
The lawmakers had gone into about an hour long executive session where they addressed matters arising from the meeting with the CBN governor as well as their conduct at the event. Many of them had applauded the governor, an act considered "unparliamentary" according to their rules.
Briefing the press after the plenary session, the chairman of the ad-hoc committee on media and Publicity, Hon Opeyemi Bamidele (ACN, Lagos State), said they noted that there has been an "attempt to draw conclusions to the effect that the House of Representatives has endorsed Islamic banking as proposed by the CBN".
He emphasised that "we want to make the position clear that the House of Representatives has not by any means and whatever grounds whatsoever endorsed Islamic banking", adding that the decision not to make the briefing by Sanusi interactive was not out of place as the presiding officer can choose to make it interactive or ask the person to "take a bow".
"There is no rule that says that if any public officer appears before the parliament, questions must be asked," he noted.
Attempting to defend the deputy speaker's decision not to allow questions, he said that it was borne out of the recognition that the proposed policy was a sensitive one which touches on religious and ethnic issues and could be worsened by sentiments.
"Nigeria doesn't need overheating now and taking on the CBN and asking questions after all issues raised by the governor could have led to a situation which no one will be able to predict".
He however gave assurance that the House will discuss and take a stand on the two proposed policies in the "best interest of Nigerians."
In a related development, the Anambra State government has roundly denied Sanusi's allegation that it collected loans from an Islamic bank.
Leader of Anambra caucus in the House of Representatives Hon Uche Ekwunife (Anambra/PDP) yesterday presented a letter from the Anambra State government which described Sanusi's assertion as false.
Ekwunife requested, among others, that the lawmakers should compel Sanusi to retract the allegation.
"The CBN governor misinformed Nigerians that Anambra State government took a loan from a non-interest bank," she said. "Anambra State has never at anytime solicited or taken any loan from an Islamic bank.
"We are not taking this information lightly. We should get the CBN governor to apologise for the misinformation."
Meanwhile, the CBN has increased its benchmark interest rate for the fourth time this year, as a means of checking inflation which is currently threatened by rising wages and higher energy costs.
It increased the benchmark interest rate by 75 basis points from 8 per cent to 8.75 per cent.
The move is geared towards checking increased public spending ahead of the implementation of the new Minimum Wage Act.
These decisions were taken to proactively tighten the huge injection of liquidity in the third quarter arising from huge wage bill from the payment of the N18, 000 minimum wage to public servants.
It is also meant to curtail the huge injections of N1.3tn disbursed recently as statutory allocations among the three tiers of government.
Source: Leadership, 27th July 2011.
Islamic banking: FG Borrowed on Our Behalf — Obi
STAN OKENWA
Anambra State has denied taking a loan from the Islamic Bank Development Bank (IDB), insisting that the Federal Government obtained the loan on its behalf.
It will be recalled that the Central Bank of Nigeria (CBN) Governor, Mallam Lamido Sanusi had during last Thursday on the floor of the National Assembly said Anambra was the first to draw a loan from Islamic Bank.
Anambra State commissioner of Finance, Mr. Eze Echesi has denied Sanusi on his claims that the state was the first to borrow from Islamic Development Bank (IDB).
It would be recalled that CBN Governor has revealed to House members that "the only state that has borrowed from the IDB; I am sorry Mr. Speaker, is Anambra State".
However, Echesi said: "Anambra State Government has not borrowed any money from any Islamic Bank recently licensed by the Central Bank of Nigeria or any other bank in that character".
He said contrary to the claim of the CBN Governor on the floor of the National Assembly that Anambra was the first State to obtain a loan from the Islamic Bank, the State had done no such thing.
Echesi said Anambra State under Governor Peter Obi has not even borrowed funds from any financial institution, but further fueled the controversy by saying that his state only enjoyed a facility secured by the apex government on his behalf.
He said there were certain programmes such as control of malaria and HIV which States execute in partnership with the federal government which are funded by the federal government.
He said there was a current collaboration with the federal government on food security programme in three states including his state, Gombe and Yobe.
"In cases like these, the federal government sources the money from financial institutions in the country or from outside".
In the case of the food security project, the federal Government is supporting us and it is at their discretion to source money from any source. But the agreement is essentially between the bank and the federal government states are secondary in such matters.
"To construe this to mean that the state government has taken a loan from Islamic Bank is a misrepresentation. It is misleading. Anambra is only a beneficiary through the federal government’s support of the State’s programme.
Echesi was upbeat that it had become imperative to reassure citizens of the State that although the State Government had the approval of the House of Assembly to take loans, Obi was mindful of the implications of taking loans and would only do so for very viable projects.
Sanusi while briefing the lawmakers had said: "Products of Islamic banking are not restricted to Muslims alone.
"In fact, if you go to Malaysia, the majority of people who patronize Islamic banking are Christians. Njar Islamic Bank (Njar) in Malaysia has over 60 Christian shareholders and the second largest shareholder is a Christian from Igboland".
Source: Daily Champion, 27th July 2011.
Back
Reps deny endorsing Islamic banking
ONYEKACHI EZE & CHUKWU DAVID, Abuja
THE dust raised by the appearance of the Central Bank Governor, Mallam Sanusi Lamido Sanusi before the House of Representatives last Thursday to explain some policies of the Bank is yet to settle as the House yesterday denied that it has endorsed neither the Islamic Banking nor the daily cash withdrawal limit policies of the CBN.
Also yesterday, the leader of the Anambra State caucus in the House of Representatives, Hon. Uche Ekwunife, told members that the CBN Governor misinformed Nigerians and the House that Anambra State Government obtained credit facility from the Islamic Development Bank.
Chairman, ad hoc Committee Chairman on Information, Hon. Opeyemi Bamidele told the House of Representatives Press Corps that "the House did not, by any means endorse the Islamic Banking nor the daily cash limit withdrawal policies of the CBN."
Hon. Bamidele explained that the invitation of the CBN Governor to appear before the House was to offer explanations on the two policies and not for the House to immediately take decision on any of them.
According to the lawmaker, policies of such matter are usually referred to the relevant committees of the House, adding "it is not our intension to play to the gallery. There is no rule that says that questions must be asked when public functionaries appear before the House. We have acted as patriots, as representatives of the people and as people capable of engaging the mood of the people" by inviting the CBN Governor to appear before the House.
He added that asking questions to the CBN Governor would lead to situations no one could predict because of the issues involved, noting that Mallam Sanusi used the forum to answer some questions raised by bishops and imams and other stakeholders about Islamic Banking.
Bamidele denied that the applause by some members of the House after Mallam Sanusi’s presentation was an endorsement of the two policies and said that the matter would be further debated by the House. "Issues of non-interest banking are not conclusive as suggested. There is difference between non-interest banking and Islamic Banking," he concluded.
Before yesterday’s plenary, the House first met at executive session where issues arising from the appearance of the CBN Governor last week were extensively discussed.
Rising under a matter of urgent importance, Hon. Uche Ekwnife (APGA/Anambra State) told the House that she has a letter from the Anambra State Government showing that at no time did the state government obtain loan facilities from non-interest bank all over the world, including the Islamic Bank.
She said the Anambra State Government did not take the statement by the CBN Governor lightly and called on Sanusi to tender apology to the state government.
In the letter signed by Eze Echesi,the state Commissioner for Finance titled: "Response to the statement by the Governor of the Central Bank of Nigeria, Mallam Lamido Sanusi on Islamic Banking and Anambra State," the state government said there was no time it made contact with the Islamic Development Bank with the purpose of obtaining loan.
The Commissioner stated that sometime in 2007/2008, Anambra State was one of the three qualifying states for support from the Federal Government under the National Programme for Food Security Expansion Phase Support Project. The other two states are Yobe and Gombe.
"As a qualifying state based on established criteria, the Federal Government earmarked funds for on-lending to the three qualifying states for the purpose of assisting in the financing for identifying the source and the sourcing of such funding is and has remained that of the Federal Government who could have obtained such funds from either Islamic Development Bank or any other Bank and from anywhere for that matter. Thus, any financial obligation of Anambra State under this National Food Security Scheme is to the Federal Government and not to Islamic Development Bank or any other Bank for that matter," the letter concluded.
The letter was laid on the table.
Source: Daily Champion, 27th July 2011.
The Islamic Banking Issue: Our Problem With Introducing New Policies.
Written By Anyanate Ephraim
The CBN governor recently appeared before the House of Representatives explaining the rationale for
interest free banking aka Islamic banking. I read in some papers that he wowed them with his mastery of the business and came out smiling as the Honourable members could not ask questions. While many people have written about the benefits of the so called Islamic banking there are still others who do not feel comfortable with its introduction.
The reasons for and against are not far- fetched. Those who are proponents say: Islamic banking brings innovation and facilitates diversity. They also say Islamic financial products are available in many countries including the UK from a number of High Street banks and offer current accounts and mortgages tailored for Muslims.
Though I am not a banker, but reading about Islamic banking tells me that the overarching principle of Islamic finance and banking products is that all forms of interest are forbidden. The Islamic financial model works on the basis of risk sharing. The customer and the bank share the risk of any investment on agreed terms, and divide any profits or losses between them. In addition, investments would only support practices that are not forbidden – trades in alcohol, betting and pornography are not allowed. Moreover, an Islamic banking institution is not permitted to lend to other banks at interest.
The main advantage I understand is that having access to Sharia-compliant banking products provides financial services to people whose faith prevents them from using the kind of products that are normally offered by Nigerian financial institutions.
Those who are against have their arguments too. For example, they say, it is a back way of Islamising the country. Some say at a time as we are in Nigeria when tension is very high between Muslims and Christians with Boko Haram struggling to Sharianise the country, selling a product that vividly projects a religious sect is not being sensitive to the security situation in the country. So they are quarrelling with the timing of the policy.
Both sides have their points but to me the key issue is not Islamic banking or whatever name it is called. It is our style of doing things. The knack for people in authority thinking they know everything all the time and show much disregard they have for the citizens. I hope these people realise that policies are meant for the people and not for the policy makers.
There is a lack of understanding of what Islamic banking is all about. There is also a high level of suspicion on the part of those who are against it. I understand some Christian leaders have spoken out against its introduction. There are also some people who have come out publicly supporting its introduction that are not Muslims. So definitely it is not about the rubrics of Islamic banking.
Sanusi said the process of commencing Islamic banking in Nigeria was set in motion in 1991 when an Act of Parliament was passed approving its establishment while the draft framework was approved in 2009. So what has the Central bank done since then? Apparently, Islamic banking was on the cards when we introduced community banks that seem to have failed. Was there any consultation in 1991 before the Act was passed? We should understand that things are changing fast in Nigeria.
Has Sanusi and the Central bank done enough to convince Nigerians? Your guess is as good as mine. I thought we have central banks in almost all states of the Federation. So why the various states branches could not hold consultations in the states to get a feel on the level of acceptance of the policy is beyond my understanding?
Sanusi has said the policy was initially approved by Soludo. What he is telling Nigerians is that he Soludo is a Christian and he wanted Islamic banking. I am sorry but that is totally irrelevant. He Sanusi was not appointed because he is a Muslim. He was appointed because the people who appointed him believe he can deliver on the promotion of a sound monetary policy for the country. Unfortunately, he has also fallen into the religion quagmire.
Sanusi knows too well that when he was in First bank, he could not introduce/implement policies without taking onboard what shareholders think. This is why I worry about the methodology of introducing policies in Nigeria. Sanusi is not alone; as this pattern of unilateral decisions that affect the citizens has become the norm in our country. Yet they say we operate a democracy.
One question I have at this point is; have the members of the House of Representatives who unanimously agreed with Sanusi gone back to their constituencies to discuss the issue? In a place where things are done properly, what is expected is for these House of Representative members to go and run local surgeries and discuss the policy with their constituents and bring feedback and discuss the issue in the house on whether Nigerians want the policy or not. Come to think of it, if a policy which was passed as an Act in 1991 has taken 20 years to be effected then something must be wrong with it.
Did the Central bank carry out any impact assessment of the proposed policy? If yes have they shared their findings publicly for people who are against the policy to see what has been done and agreed? What is the level of public consultation?
A simple impact assessment would have asked questions like why Islamic banking is necessary now and why is Central Bank intervention needed to bring it to fruition. What are the objectives and the intended effects of Islamic banking on the economy? What other options have been considered and the justification for this preferred option. Finally, is there a period of review and plan for future action so that if it does not achieve what it is intended to achieve, it could be done away with or modified. We know that policies in Nigeria are all scattered here and there and once a policy has been introduced nobody cares again as it will stay whether good or bad.
I understand Sanusi said Islamic banking is practiced in 74 countries of the world out of the 196 countries. However what he has failed to tell Nigerians is that the main centres for Islamic banking still tend to be concentrated in the Middle East and Gulf region.
It is true there are Muslims all over Nigeria, so this form of banking will need to be offered by most banks as it is done in the United Kingdom. However, there is only one bank which is solely an Islamic bank in the United Kingdom - the Islamic Bank of Britain and it has only seven branches. We know that Nigeria being what it is as of today, there will be many banks that will spring up. How will the Central bank vet the sources of finance for setting up these banks?
There is an estimated 70 million Muslims in the country who deserve to bank they way they like. But just like Sharia, have they asked for it? If they did; has it been discussed in our legislative houses? Central Bank may have a prerogative on the monetray policy of the country, but sensitive policies like this need to be adequately discussed and agreed in the interest of the unity of our dear country. I therefore wonder the rationale for CBN to spearhead the request to set up such banks. The CBN’s role is to promote not force any policy on us.
Islamic banking is about creating wealth for the community so what has happened to all the community banks approved by the Central Bank of Nigeria before?
There was a Central Bank of Nigeria conference recently, but reports have it that the conference was meant to counter Christian opposition to the introduction of Islamic banking and not to convince them of the benefits.
Proponents say Islamic banks deliberately don't finance anything that is harmful to society as they only look for projects that make positive impact in people's lives. Though this is a good thing, how will CBN monitor this to stop funding of extremism?
Finally, I believe we should change our way of introducing policies in the country. We should have more consultations and get Nigerians onboard as part of decision making. Nigerians are now more alert to any policy that will impact on them. Many more vehement oppositions s are imminent if we don’t do things the right way.
Critics of Islamic Banking Ignorant –Sharia Council
From ISMAIL OMIPIDAN, Kaduna
The Supreme Council for Sharia in Nigeria, SCSN, has threatened that Nigerian Muslims were prepared to go to war rather than give up the quest for Islamic banking.
This is even as it warned Christian clerics in the country to drop their opposition to the idea, saying that Muslims in the country would defend the implementation of the Islamic banking system in the country with the last drop of their blood.
The group’s position was made known in Kaduna yesterday, through its President, Dr. Ibrahim Datti Ahmad, who read the communiqué issued at the end of its meeting held at Arewa House, Kaduna.
He further argued that since interest-free banking was practised in Britain and other Christian dominated countries successfully, Nigerian Muslims would resist any attempt by the Christian Association of Nigeria (CAN) to frustrate the implementation of the Islamic banking system in the country.
“We are very happy that with a lot of efforts Jaiz Bank has now become a reality. The company owning Jaiz has assured us that the bank is coming in September and they have assured us that they will be starting with three branches, namely Abuja, Kaduna and Kano. And they will continue to open the branches rapidly, thereafter. We are also aware of the amount of noise and nonsense we hear from the Christian clergy, some of whom are so ignorant that they are not even worth to be called clergymen.
“They think they can blackmail the government, the Central Bank or the Muslim ummah to abandon the project. I want to assure them that nothing can stop the Jaiz Bank from coming into being because it’s being brought in according to the laws of Nigeria. There is nothing illegal about it. If they have a Christian bank that they want to establish, they have the freedom to bring it to the Central Bank and if they can prove their case, a Christian bank will be opened.
“We the Muslims of this country are fed up and tired with the stupid vituperation of the CAN. They are a bunch of idiots and they feel they can dictate to the Muslims even how we should live our lives.
“And we are warning the government not to listen to them because there is a limit to the amount of nonsense we can take. We are the majority in this country, whether the Christians like it or not. We are going to have this bank and there is nothing they can do about it. We have taken a lot of nonsense, we have come to the end and from now it’s tit for tat. There are quite a number of rascals in cassocks that have been talking recently; we’ll meet fire for fire this time. Whether it’s an archbishop or whoever he is who talks nonsense, we’ll get people to answer him in the same language. If he talks as a rascal, we’ll reply him as a rascal.
“Jaiz Bank has come to be and there is nothing they can do about it and if we have to go to war on this, we’ll go to war. Let the bloody fools wearing cassocks stop disturbing our peace. Gentlemen, being peaceful doesn’t mean we are cowards. We warn the idiots in cassocks, tell them to stop disturbing our peace, if they want us to live together in Nigeria. Everybody can go his way, we don’t have to live together. We can’t live under bloody idiots dictating to us how we live our lives even within the laws of the country.
“Whatever they call themselves, whether archbishop, priest or whatever they are, let them stop disturbing our lives. We’ve had enough; let the government warn them because these abuses are enough. If they are rascals and they don’t understand anything because they come from very poor, wretched backgrounds, we are not like that. We have been patient but there is a limit to what we can take. On this Jaiz Bank, there is no going back. Everything has been done according to the law and if the Christians think this country belongs to them, they are a bunch of idiots. We’ll meet fire with fire; let them leave us alone. If they want us to live in Nigeria peacefully as we want to do, then let them respect our rights as we concede to them their own rights,” SCSN boss added.
On the post-presidential election crisis that occurred in Kaduna and other parts of the North, the group again said the attacks were premeditated, adding that “this reality is supported by the fact that Southern Kaduna Muslims were massacred on Sunday even before the election results were announced. Whatever happened was a reaction thereto. The refugees were left to cater for themselves. In fact, most of them were compelled to leave the camp. The government must restore people’s freedom, compensate them fully and return to their homes.
“The activities of the Joint Task Force in Maiduguri are most unfortunate. The JTF is using an unbalanced force in its attempt to restore peace and order to Borno state. Innocent lives were killed, women are being raped and people’s property being plundered.
“The SCSN is watching carefully, plans by some politicians to bring back the issue of extended tenure of the present regime. This is very much similar to the thrown out third term bid of the former President Obasanjo. We call on all Nigerians to condemn and resist this attempt resolutely.
“As we are approaching the Holy month of Ramadan, Muslims are enjoined to participate in the moon sighting exercise, listen and obey announcements. Muslim businessmen and women are requested to be compassionate to their brothers and sister in the sales of commodities,” the SCSN said.
Source: Sun, 25th July 2011.
Back
Sanusi faulted on Islamic Bank
By Chris Oji, Enugu
Central Bank governor, Sanusi Lamido Sanusi was yesterday faulted over his explanation of the Islamic Bank on the floor of the House of Representative.
The Anglican Bishop of Enugu and Chairman Christian Council of Nigeria (CCN) Enugu, Bishop Emmanuel Chukwuma described the explanation as fanatical.
Chukwuma who spoke with journalists in Enugu said if Sanusi does not have a hidden agenda of trying to deceive and lure Nigerians into the hands of terrorists groups and suicide bombers, he should desist from his idea of “Islamic in the entire free interest banking idea for the nation”
According to the Bishop, “as Christians we are not against interest free banking services in the National banking policy but we say that it becomes very offensive and sets the nation on a time bomb with that connotation ‘Islamic’.
“While christian institutions, churches and organizations were registering private universities with christian religions names, the Moslems through their agents, kicked against it and the National University Commission honoured their request by refusing such names,” the Bishop recalled.
“What this portends therefore,” the Biship maintained, “ is that Sanusi should own up and be more sincere to himself and to Nigerians and drop that name “Islamic” in the CBN’s interest banking policy or honorably resign his position as the CBN governor if he has lost senses of what to give to Nigerians in this period of national socio- economic quagmire.”
He stated that there was no business that thrives without profit making.
Source: The Nation, 24th July 2011.
CAN Expresses Disappointment Over Endorsement Of Islamic Banking By Reps
BY CHRIS IREKAMB
THE Christian Association of Nigeria (CAN), through its President, Pastor Ayo Oritsejafor, yesterday expressed disappointment over the endorsement of the controversial Islamic banking in Nigeria, by the House of Representatives, saying the act smacks of bowing to an already written script.
Reacting to the said endorsement by members of the Lower House after an intensive briefing by the Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, Pastor Oritsejafor described what took place at the hallowed chambers, as a sham.
A statement signed by the CAN president said the members of the House failed to assuage frayed nerves and pacify those Nigerians who have called for proper scrutiny of the CBN governor’s attempt to Islamise the country.
According to him, the Christian community and well-meaning Nigerians across the country, are very disappointed at what happened at the House of Representatives on Thursday, because the members could not muster the courage to even ask very salient questions that have agitated the minds of the people.
For Instance, Oritsejafor said, “they failed to ask the CBN governor very probing questions about the workability of the Islamic Bank, the plot to Islamise the country, which has already began by the reintroduction of Arabic symbols in the nation’s currency notes, and why Mallam Sanusi is using state funds to promote Islamic Banking.”
He averred that well-meaning Nigerians heaved a sigh of relief when all the major news media carried reports that the House of Representatives after its plenary session on Tuesday, summoned the CBN governor to explain the apex bank’s stand on Islamic banking and the decision to peg daily cash withdrawal limit by individuals at N150,000 and N1 million for corporate customers effective 2012.Oritsejafor further argued that the Christian Community in Nigeria, which has been kept in the dark all along over the CBN’s quest for an Islamic Bank at the expense of other pressing economic issues, has raised eyebrows over the workability of the policy, which appears to be another attempt to Islamise the nation.
Source: The Guardian, 24th July 2011.
Back
Reps endorse Islamic banking, cash withdrawal policy
By Onyedi Ojiabor, Assistant Editor and Victor Oluwasegun, Abuja
The House of Representatives yesterday gave tacit approval to the planned introduction of the controversial Islamic Banking in Nigeria by the Central Bank of Nigeria (CBN).
They also backed down from opposing the CBN’s proposed policy on cash withdrawal limit from banks.
These endorsements came after the CBN Governor, Sanusi Lamido Sanusi briefed members for about two hours in plenary.
On Tuesday, the House had, through a resolution, invited Sanusi in line with Section 8(4)(5) of the CBN Act to brief members on the bank’s new policies on cash withdrawal limit and the implementation of Islamic Banking in the country.
Intense controversies have continued to trail the two policies since they were unfolded by the apex bank.
The proposed cash policy seeks to discourage daily withdrawals and lodgments above the prescribed limits (N150, 000 and N1 million for individuals and companies respectively).
Christians have also kicked against Islamic Banking, which is a form of non-interest banking, saying it was a plan conceived to Islamise Nigeria.
But after Sanusi’s briefing, Deputy Speaker, Hon. Emeka Ihedioha, declared that they were satisfied with and better enlightened by the briefing.
Ihedioha, who did not allow questions from members said: “It is not a question and answer session, we only invited the CBN Governor to brief us on the policies. We are satisfied and better enlightened and educated about the policies.”
However, foreclosing questions by Ihedioha did not go down well with some members who protested openly after the plenary.
Ihedioha presided over the session in the absence of Speaker, Aminu Waziri Tambuwal, who went to Sokoto for the burial of the Chairman, National Assembly Service Commission, Engr. Ahmed Aliyu Dogodaji.
Sanusi, who started with what the policy of cash withdrawal limit meant and the rationale behind it, said the apex bank did not limit the amount individuals or corporate bodies could withdraw per day.
He said most of those criticising the policy have failed to read the circular on the policy.
“If you withdraw more than N150,000 per day as an individual, there is a cost to pay and if you as a corporate body withdraw more than N1 million per day, there is also a cost to pay.
“For the avoidance of doubt, no limit exists on cash transaction, but the very few high volume cash users should bear commensurate service cost, while most Nigerians are exempted from subsidising them.
“The 90 per cent of Nigerians who are poor people are subsidising 10 per cent, who impose the huge cost of cash on the system,” Sanusi explained.
The CBN Governor, who took time to explain how the CBN arrived at N150,000 and N1million, insisted that the policy was formulated to remove the burden of subsidising cash transactions of the rich by the poor.
He said the industry proposal was not to place limit on cash transactions, but to provide that the 10 per cent of customers that make high volume cash transactions will bear the associated cost and eliminate the subsidy by the mass public (90 per cent) of banking customers.
The policy, he said, will have direct impact on banking industry efficiency and cost structure. It will also reduce the cost of cash to the financial system and result in significant savings that could be passed on to customers in form of reduced cost of banking services and lower lending rates to borrowers, he said.
He noted that the objective of the policy on cash withdrawal was different as it was targeted at reducing cash transactions in the banking industry in favour of electronic means of payment.
“We all travel all over the world, nobody goes to United Kingdom and carries one million pounds, and nobody goes to the United States of America and carries $1million.”
He insisted that those who go to bank to withdraw N20 million, N30 million or N80 million have an alternative.
“They can use electronic means to conduct their transactions, but if they choose to go to bank to withdraw N20 million they have to pay. The people complaining about cash withdrawal limit are the rich people,” he said.
Source: The Nation, 22nd July 2011.
CBN, Islamic Banking, Law And Appropriate Regulation Of NIFI In Nigeria
BY EGHES EYIEYIEN
Preamble
THE Central Bank of Nigeria foisted on the nation a needless controversy when, in its inordinate ambition and misplaced over-zealousness to establish Islamic Banking in Nigeria, it purported to assume legislative powers which it does not have and introduced provisions in its Framework on Non-Interest Financial Institutions (NIFI) issued on 13th January, 2011, which are illegal, unconstitutional, unjust, inequitable and blatantly discriminatory against non-Muslim Nigerians.
The CBN Guideline, the Framework for the Regulation and Supervision of Institutions Offering Non-Interest Financial Services in Nigeria (NIFI Framework), essentially redefined Non-interest Financial Institutions as Islamic Banking contrary to the spirit and letter of the Banks and Other Financial Institutions Act (BOFIA) of 1991 as amended ostensibly in the mistaken belief that only Muslims are interested in that form of financial services.
Why The CBN NIFI Framework Is Illegal And Unconstitutional
The NIFI Framework stated that: “A Non-Interest Financial Institution (NIFI) means a bank or Other Financial Institution (OFI) under the purview of the Central Bank of Nigeria (CBN), which transacts banking business, engages in trading, investment and commercial activities as well as the provision of financial products and services in accordance with Shariah principles and rules of Islamic commercial jurisprudence.” The Glossary of Terms of the CBN’s NIFI Framework states that: Shariah Principles refers to “the divine guidance as given by the Holy Qur’an and the Sunnah of the Holy Prophet and embodies all aspects of the Islamic faith, including beliefs and practices”.
The only legally valid definition is stated in Section 61 of the Banks and Other Financial Institutions Act of 1991, which speaks of a “Profit and Loss Sharing Bank”. That is, “a bank which transacts investment or commercial banking business and maintains profits and loss sharing accounts”. Profit and Loss Banking has always been the interpretation and understanding of Non-Interest Financial Services in Nigeria. When the CBN granted an Approval-in-Principle Licence to Jaiz International Bank PLC in 2004 while Chief Joseph Sanusi was the CBN Governor, the licence was issued for it to carry on business as a Profit and Loss Sharing Bank. Curiously, the present CBN Governor, Mallam Sanusi Lamido Sanusi, was widely reported in the mass media to have announced on Monday, 20th June, 2011, at a Conference on Islamic Banking in Dakar, Senegal, that the CBN had issued (?) Jaiz International Bank PLC an Approval-in-Principle as the “first Islamic Bank in the country”. Jaiz Bank was unable to operate as a Profit and Loss Sharing Bank not because there was no Islamic Banking Guideline but simply because it was unable to raise the minimum capital requirement of N25Billion. The CBN has now inexplicably lowered the capital requirement for Islamic Banks to just N10Billion to achieve “National Bank” status as against the N25Billion it stipulated for Deposit Money Banks. Why is the Sanusi Lamido Sanusi-led CBN unduly eager to make life easier for Jaiz International Bank and other proposed Islamic Banks?
By insisting that Non-Interest Banking products must be “Shariah compliant”, the CBN had also unjustly excluded non-Muslim Nigerians from the emerging Non-Interest Banking business sub-sector contrary to Section 16 1(d) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) which states that “without prejudice to the right of any person to participate in areas of the economy within the major sector of the economy, protect the right of every citizen to engage in any economic activities outside the major sectors of the economy”.
Another shocking and offensive aspect of the NIFI Framework was that it provided for the creation of “the CBN Shariah Council”. The CBN Shariah Council was to “advise the CBN on Shariah matters for the effective regulation and supervision of NIFIs in Nigeria”. Since such a body must necessarily comprise only Muslims, the CBN would be flouting fundamental provisions of the Nigerian Constitution as follows:
Contravening the Federal Character Principle entrenched in Section 14(3) which states that “The composition of the Government of the Federation or any of its agencies and the conduct of its affairs shall be carried out in such a manner as to reflect the federal character of Nigeria and the need to promote national unity, and also to command national loyalty, thereby ensuring that there shall be no predominance of persons from a few State or from a few ethnic or other sectional groups in that Government or in any of its agencies”.
Contravening the secularity of Nigeria enshrined in Section 10 of the Constitution of the Federal Republic of Nigeria which states that “The Government of the Federation or of a State shall not adopt any religion as State Religion”;
Contravening the constitutionally guaranteed freedom of religion as stated in Section 38 (1) that “every person shall be entitled to freedom of thought, conscience and religion”.
But unarguably the most significant issue is that fact that the CBN was introducing religion into Nigerian banking contrary to the spirit, letter and intendment of Section 39(1) of BOFIA which states: “Except with the written consent of the Governor (a) no bank shall, as from the commencement of this Decree, be registered or incorporated with a name which includes the words “Central” “Federal,” “Federation,” “National”, “Nigeria”, “Reserve”, “State”, “Christian”, “Islamic”, “Moslem”, “Quaranic”, “Biblical” ”.
The BOFIA was originally issued in 1991 as a decree and signed into law by the then Military President, Gen. Ibrahim Badamasi Babangida. The Governor of the CBN at the time was Alhaji Abdulkadir Ahmed. Though committed Muslims, Gen. Babangida and Alhaji Ahmed were obviously sensitive to the religious sensibilities of Nigerians, especially with the crisis the country was thrown into over the issue of Nigeria’s membership of the Organisation of Islamic Countries (OIC) at that time. The Babangida government saw that it was imperative to include an unambiguous statutory provision in Section 39(1) of the BOFIA which would ensure that no religious colouration was given in any guise to banking in the country.
Obviously, the anticipation and intendment of the law was that the Governor of the Central Bank of Nigeria would not be swayed by religious considerations to grant a waiver to allow the use of those religious appellations even though it invested him with that power. Some have erroneously argued that the present CBN Governor has now exercised that power by introducing Islamic Banking! Is this expedient? What was the over-riding and compelling reason for this exercise of the Governor’s discretion? What has changed in Nigeria between 1991, when Gen. Babangida signed the BOFIA into law, and 2011 when we are now confronted with even more extreme religious zealotry and fundamental Islamic terrorism with the advent of Boko Haram?
Even more strange is that the CBN NIFI Framework even re-affirmed the statutory provision in Section 39(1) of BOFIA in Section 10.1 of the NIFI Framework under the heading “Branding”. That section states:
“In line with the provisions of Section 39 (1) of BOFIA 1991 (as amended), NIFIs shall not include the word “Islamic” as part of their registered or licensed names. They shall, however, be recognized by a uniform symbol designed by the CBN. All the signages and promotional materials of NIFIs shall bear the symbol to facilitate recognition by customers and the general public”.
Is this then not superfluous? What is in a name after all, one might argue. Clearly, the law is really not as concerned about names as it is with keeping religion out of Nigerian banking.
Already, many non-Muslims have, understandably and expectedly, read religious motives to the issuance of the Framework and the passion with which the CBN is pursuing the establishment of Islamic Banking in Nigeria. This is more so since it is being introduced by the CBN under the purview of its current Governor, Mallam Sanusi Lamido Sanusi, who is known to be an Islamic Scholar with expertise in the Shariah Law having obtained a degree in that regard from the University of Africa, Khartoum, Islamic Republic of Sudan.
Understanding Non-Interest Banking
IT is important they we have an accurate understanding of Non-Interest Financial Services.
Non-Interest Banking dates back to about 1444 B.C. It has its origin in the Jewish practice of lending money by an Israelite to a fellow Israelite without charging usury or interest as commanded in Exodus 22:25 and Deuteronomy 23: 19- 20.
Exodus 22:25.... “If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury”.
Deuteronomy 23:19-20.... “Thou shalt not lend upon interest to thy brother: interest of money, interest of victuals, interest of any thing that is lent upon interest. Unto a foreigner thou mayest lend upon interest; but unto thy brother thou shalt not lend upon interest; that the LORD thy God may bless thee in all that thou puttest thy hand unto, in the land whither thou goest in to possess it”.
So clearly, Non-Interest Banking pre-dated Islam. It cannot, therefore, be the exclusive preserve of Muslims or Islam.
Non-Interest Banking is Not SynonyMOUS with Islamic Banking.
In modern times, the principle of Non-Interest Banking is evident in Venture Capital and Private Equity firms where projects and businesses are financed through equity funds after the financier has assessed the risk as acceptable. Non-interest banking works essentially on the principle of RISK SHARING between the capital provider and the user. The profit or loss arising from the transaction is shared on an agreed basis. Non-Interest Banking enables persons (and projects) whose credit risk is high and unattractive to conventional lenders and who have no adequate collateral for loans to access capital.
Islamic banking as we know it today is actually a recent innovation and begun in Egypt just about 50 years ago. The first Islamic Bank, the Dubai Islamic Bank, only commenced business in 1975. So Islamic Banking is merely a sub-set of Non-Interest Banking.
There are successful models of Non-Interest Banking in the world that are not “Shariah-compliant” or in line with “Islamic jurisprudence.” The JAK Members Bank of Sweden (please visithttp://jak.aventus.nu/22.php) is one. The co-operative society Jord Arbejde Kapital (JAK) was founded in Denmark during the Great Depression in 1931. The experiments with JAK banking in Denmark inspired a group in Sweden to develop a non-profit named Jord Arbete Kapital - Riksförening för Ekonomisk Frigörelse (National Association for Economic Emancipation) in 1965. This pioneers’ group developed the mathematical system based on saving points, called “balanced saving system”. The association has been operating as an interest-free savings and loans system in Sweden since 1970 but eventually received a banking licence from the Swedish Financial Supervisory Authority at the end of 1997.
The Revised CBN NIFI Guideline
After initially defending the guideline astutely and vehemently for over six months, the CBN finally agreed its NIFI Framework was faulty and required to be revised. On 21st June, 2011, it re-issued its NIFI as the “Guidelines for the Regulation and Supervision of Institutions Offering Non-Interest Financial Services in Nigeria”. While it is commendable that the CBN has yielded to superior reasoning on the subject, sadly, the new guideline only made merely cosmetic modifications of the previous NIFI Framework and seeks to perpetuate most of the illegal, discriminatory and unconstitutional provisions, which caused the controversy in the first place.
The highlights of the revised NIFI Framework are as follows:
Established two categories of NIFIs:
Islamic Financial Institutions; and
“Other Non-Interest Financial Institutions”.
The illegal, unconstitutional, unjust and discriminatory exclusion of non-Muslims from owning and operating NIFIs now addressed. The revised NIFI Guideline now states “Islamic banking as one of the models of non-interest banking, serves the same purpose of providing financial services as do conventional financial institutions save that it operates in accordance with principles and rules of Islamic commercial jurisprudence that generally recognises profit and loss sharing and the prohibition of interest, as a model”.
So, in essence, the previous NIFI Framework has been retained as is but only applicable to Islamic Financial Institutions.
CBN is to licence “Other Non-Interest Financial Institutions if it receives applications.
CBN Shariah Advisory Council renamed “Advisory Council of Experts”
But these provisions do not address the fundamental issue that Islamic Banking as of today remains ILLEGAL and UNCONSTITUTIONAL in Nigeria given the provisions of the Banks and Other Financial Institutions Act of 1991 as amended and the Nigeria Constitution.
Unanswered Questions And Contentious Issues
Very many questions remain unanswered:
Why the special and illegal treatment of Islamic banking in contravention of Section 39(1) of BOFIA and the Nigerian Constitution?
A special CBN NIFI Framework for Islamic Banking contravenes the secularity of Nigeria enshrined in Section 10 of the Constitution, which states that “The Government of the Federation or of a State shall not adopt any religion as State Religion”.
Why introduce religion into Nigerian banking in contravention of the spirit and letter of Section 39(1) of BOFIA?
Why have an “Advisory Council of Experts”?
Who are these “experts” in Islamic Banking?
The Advisory Council of Experts if comprised of Muslims alone is in contravention of the constitutional provision regarding Nigeria’s secular status and the Federal Character Principle?
Section 14(3) of the Nigerian Constitution: “The composition of the Government of the Federation or any of its agencies and the conduct of its affairs shall be carried out in such a manner as to reflect the federal character of Nigeria and the need to promote national unity, and also to command national loyalty, thereby ensuring that there shall be no predominance of persons from a few State or from a few ethnic or other sectional groups in that Government or in any of its agencies”.
Why Is CBN A Member Of The Islamic Financial Services Board (IFSB)?
Even the United Kingdom and the United States of America which the CBN puts forward as some kind of examples of “best practice” in the area of Islamic Banking and tolerance, are not even Observer Members of the IFSB. In North and Sub-Saharan Africa, the only “Full Members” of the IFSB are Egypt, Sudan and Djibouti.
Who made Nigeria a “Full Member” of the IFSB?
Why will CBN surrender bank regulation to Muslim clerics?
Will CBN also have councils for every other faith-based NIFI?
What is CBN’s competence to delve into religious matters, which are subjective and open to various interpretations?
An Alternative NIFI Framework
The CBN should have a uniform NIFI Framework, which is not religion-specific in line with BOFIA. In the education sector, for instance, the Federal and State Ministries of Education set guidelines for private sector participation, which stipulate UNIFORM licensing/registration requirements, standards for required infrastructures, and a uniform curriculum in line with the nation’s National Education Policy. The regulatory guidelines in the education are not religion-specific yet promoters and investors who wish to establish faith-based educational institutions do so without breaching the law or regulation. Why is it difficult for the CBN to adopt a religion-neutral NIFI Framework as envisaged by the extant banking law if the motivation is not religious?
Consequently, the CBN NIFI Framework should focus on the following issues:
Minimum Paid-up Capital and Licensing Requirements; Corporate Governance;
Acceptable characteristics of products that qualify for NIFI status; Enhanced operational standards for banks and other financial institutions that offer NIFI; Enterprise-wide Risk Management Accounting, Audit and Disclosure Requirements; Rendition of Periodic Regulatory Returns; and Prudential Guidelines with regard to: Capital Adequacy Ratio; Cash Reserve and Liquidity Ratio; and
Provisioning for Asset Losses.
Conclusion
Non-Interest Banking is a veritable means of providing access to capital to the un-banked and those who would ordinarily not qualify for debt financing. It can provide leverage for Nigeria’s economic development and must be encouraged.
But Non-Interest Banking Must Not Be Religion-Specific.
This is not about religion. This is really about the rule of law, constitutionality, equity, and justice in a plural state.
Eyieyien is CEO, Pharez Consulting
Source: The Guardian, 23rd July 2011.
Banking and Taxation in the Name of God and the Law
TAOFEEQ ABDULRAZAQ
The Central Bank of Nigeria on Tuesday 21st June 2011 issued new guidelines for the regulation and supervision of institutions offering non-interest financial services in Nigeria. The CBN stated that the emphasis of this guideline is on non – interest financial institutions operating under the principles of Islamic Commercial Jurisprudence, one of the categories of non- interest financial institutions.
These guidelines, according to the CBN, are issued pursuant to the non- interest banking regime under section 33(1) (b) of the CBN Act 2007; section 23(1);52, ;55(2); 59(1) (a); and 61 of the Banks and Other Financial Institutions Act (BOFIA) 1991(as amended) and section 4(1)(c) of the Regulation on the Scope of Banking Activities and Ancillary Matters, No 3, 2010. It shall be read together with the provisions of other relevant sections of BOFIA 1991(as amended), the CBN Act 2007, Companies and Allied Matters Act (CAMA) 1990 (as amended) and Circulars/Guidelines issued by the CBN from time to time.
The guidelines further provides that Institutions Offering Islamic Financial Services (IIFS) may charge such commissions or fees as may be necessary in accordance with the principles under this model and the funds received as commissions and fees shall constitute the bank’s income and shall not be shared with depositors.
In addition, the guideline provides that there shall be compliance with prescribed Audit, Accounting and Disclosure Requirement such as the Nigerian Accounting Standards Board (NASB) and that where there is a conflict between the local and international standards, the provisions of the local standards issued by NASB shall apply to the extent of the inconsistency. This is an interesting provision and one may ask, what will happen if there is a conflict between NASB standards and those of the Islamic Financial Services Board (IFSB) or with those of the Accounting and Auditing Organization for Islamic Financial Institution (AAOIFI)? Will NASB standards prevail? Are the IFSB and AAOIFI international standards by virtue of location or principles? If it is by location, are the Islamic principles, it espouses not local? Do these principles extend to taxation?
Presumably, the commissions and fees which constitute the bank’s income as well as the profit sharing investment accounts will be subject to Nigerian taxation. What taxation standards will be applicable? Would it be those of IFSB, AAOFI, NASB or those of the Chartered Institute of Taxation? Could it even be those of the Relevant Tax Authority who are empowered under both section 62 of CITA LFN 2004 and section 52 PITA LFN 2004 to require in writing that a taxpayer keep such records, books and accounts as maybe considered adequate in such form and in such language (Arabic?) as maybe specified in the said notice? How are the Islamic financial products to be taxed?
While the idea of facilitating faith- based finance may seem economically rational, a fundamental question similar to those asked and resolved by Brett Freudenberg and Mahmood Nathie with respect to Australia,a similar federation to Nigeria, in their work on ‘’ The Constitution and Islam: Are Tax Reforms Possible To Facilitate Islamic Finance?’’ needs to be asked in Nigeria and addressed: Is it appropriate for Nigeria’s tax laws to be amended to facilitate what may be construed to be the furtherance of any religion? In other words, should the products of Islamic Banking be taxable by the principles of Islamic taxation?
The recognition of taxation in Islam generally follows the traditions in Judeo-Christian teachings, albeit with some differences. The equivalent of tithes in Islam is the ushr, or a tenth of gross agriculture output - a tax calculated taking into account for instance, whether the land is irrigated naturally or by man. In Islam this tithe is only due when there is a produce, to the extent that when the produce is destroyed by the acts of God, its payment lapses. Thus ushr is a form of tax on income in the sense that it is value of goods (produce) that become the basis of taxable income. The Caliph (the Head of State today) ‘has the right to levy on the people the amount needed if funds are not available in the public treasury’. The ushr was a fixed levy, but the Jurist, Abu Yusuf, in his treatise on taxation in Islam proposed a model of proportional taxation and not fixed levy.
A different variant of the ushr known as the ushur also exists – one introduced by the second Caliph Umar- that resembled a type of sales tax. It was charged to traders who entered the Islamic state to conduct trade.
A third form of taxation in Islam is what is known as kharaj or land tax payable to the state- irrespective of who owns the land. The implications of these tax impositions is that the state’s right to tax is legitimized- although this right is not to be assumed to be unfettered.
While Islam does allow the levying of taxes to a reasonable extent to meet all necessary and desirable state expenditures, it does not permit an unjust tax structure which penalizes honesty and creates an un- Islamic tendency of evading taxes.
A country has the right to raise resources through tax collection:
This right is defended on the basis of the Prophetic saying that ‘ in your wealth there are also obligations beyond the zakat’ , and one of the fundamental principles of Islamic Jurisprudence is that ‘a small benefit may be sacrificed to attain a larger benefit and a smaller sacrifice may be imposed in order to avoid a larger sacrifice’. Most Jurists have upheld the right of the State to tax. … If the resources of the State are not sufficient, the State should collect funds from the people to serve the public interest because if the benefit accrues to the people it is their obligation to bear the cost.
While taxation has been accepted as an institutionalized function in the monotheistic faiths ,it remains to be seen how these functions converge in Nigerian law.
The norms that characterize Islamic finance may be classified into two dimensions- a moral and ethical dimension, and an economic dimension. The first deals predominantly with socio-economic justice and equitable distribution through tax by way of Zakat(obligatory alms) and the prohibition of trading in forbidden objects and hoarding. The economic dimension incorporates a number of distinct elements namely:
Freedom to contract; Freedom from riba (interest); Gharar or excessive speculation and uncertainty; Freedom from al-qimar (gambling) and al-maysir (unearned income); Trading and investment in forbidden acts and objects (such as gambling, pornography and alcohol) Duality of risk (parties must share risk); and Asset – based financial transactions, based on the condition that identifiable and tangible underlying assets should underpin financial transactions.
The juristic principles underpinning these elements are vast and extant and transcend into very fine detail over which there is no unanimity among the four leading Islamic juristic schools. Thus, as a means of standardizing these principles, the Islamic Financial Services Board and the Accounting and Auditing for Islamic Financial Institutions (AAOIFI) have compiled detailed guidelines for practitioners to follow in the application of Islamic finance.
Among the financial products frequently referred to in Islamic financial contracts are murabaha or (cost-plus) financial transactions; ijara contracts (leasing contracts); mudarabah contracts (trustee partnership); musharaka contracts (forms of limited partnership); sukuks (Islamic bonds); and takaful (mutual insurance arrangement).
The practical manifestation of these products within Islamic banking institutions is accomplished with the assistance of both sharia scholars and conventional legal practitioners. This additional regulatory layer is meant to guide financial institutions to ensure compliance with the sharia in their financial activities. For this reason, Islamic banks are required in many jurisdictions to establish sharia supervisory boards or committees.
The influence of religion in our corporate existence as a nation is illustrated by the existence at the beginning of the 1999 Nigerian Constitution of a preamble which may be described as a ‘constitutional obeisance to God’. The preamble reads:
`` We the people of the Federal Republic of Nigeria, having firmly and solemnly resolve, to live in unity and harmony as one indivisible and indissoluble sovereign nation under God’’.
It appears that wording of the preamble was intended to appeal to those voters of religious conviction for the formation of a Federation.
Another very clear connection between the Nigerian State and religion are the current practices at State functions where each function begins with two prayers- one an Islamic prayer and the other the Christian prayer. This practice of prayer commencing State functions is not unique to Nigeria, as other common law jurisdictions such as Australia, New Zealand, Canada, the UK and the United States also do this.
A clear example of the influence of religion and the provision of preferential treatment are the tax concessions available to religious organizations. For example, section 25(4) CITA 2004 LFN exempts from tax the income of charitable, religious, scientific or public educational institutions.
Some argue that the present tax dispensation is ‘inequitable’; that it does not reflect present-day realities in the marketplace; that religious tax exemptions impose cost imposts on the public generally and, the benefits are for the purpose of advancing religion and the national interest. These sentiments are based on the premise that as Nigeria is a secular state, there is no need to advance any religion. This tension was also recognized in Australia by Kirby J (dissenting) in FCT v World Investments [2006] FCA 144,250, that;
‘’ A taxation exemption for religious institutions, so far as it applies, inevitably affords effective economic support from the Consolidated Revenue Fund to particular religious beliefs and activities of some individuals. This is effectively paid for by others… a cross-transference of economic support. The courts must recognize that this is deeply offensive to many non-believers, to people of different faiths and even to some people of different religious denominations who generally share the same faith’’.
Kirby J (supra) went on to emphasize the importance of equity between taxpayers that:
‘’charitable and religious institutions should share with other taxpayers the liability to pay income tax upon their income. Exemptions needs to be clearly demonstrated as conformable to law’’
Further, non-religious groups argue that section 10 of the 1999 Nigerian Constitution which provides that the Government of the Federation or of a State shall not adopt any religion as State religion was intended to make Nigeria a secular state and that reality ought to be reflected in denying preference to religion in tax exemptions privileges or business ventures .
The necessity for tax and regulatory reform to be binding and comprehensive in relation to Islamic finance in Nigeria was demonstrated in the South African High Court case of Registrar of Banks v Islamic Bank of South Africa Ltd (in liquidation) (Case No 25286/97) in October 1997. The regulator approved the granting of a banking license to the respondent based on shariah principles in the absence of appropriate banking and tax law. Further, the court – appointed inspector’s Report in this case revealed serious misunderstanding and lack of consistency over tax treatment of so – called shariah compliant financing contracts.
Thus following the bank’s collapse, the liquidator simply set aside the shariah construction of depositors’ claims as well a clients debt obligations to the bank and applied conventional banking laws in the liquidation proceedings. This demonstrates the necessity for a comprehensive set of laws for regulatory authorities to apply in their governance duties and that religions tenets will not over ride the law. It is therefore necessary, proper and required that tax reforms be introduced to provide and regulate faith-based transactions ,particularly Islamic Finance.
A more interesting prospect would be the application of Islamic Criminal Law to the offence of tax evasion in the matter of Islamic Finance. The result of this application would of necessity be quite ``handful’’. We may even begin to look forward to having Shariah Departments in the different Relevant Tax Authorities.
In the matter of banking and taxation in the name of God and the law in Nigeria, perhaps, in the words of Seneca-----
`` Our fears are more numerous than our dangers and we suffer more in our imagination than in reality’’.
Finally, and in the mean time, we shall await the Relevant Tax Authorities to issue their information circular on the tax treatment of Islamic Financial Transactions in Nigeria.
*Professor Taofeeq Abdulrazaq is a Tax Partner at Saffron Professional Services.
Source: Business Day, 7th July 2011.
Back
Anglicans kick Against Islamic Banking
BY CHIDI NKWOPARA
OWERRI— Angry reactions have continued to trail the planned introduction of Islamic banking system in the country by the governor of Central Bank of Nigeria, CBN, Mallam Sanusi Lamido Sanusi.
The condemnation was part of a 14-point communiqué issued at the end of the third session of the first synod of the Diocese of Oru, Anglican Communion, and signed by the Bishop and Synod Secretary, Rt. Rev. Geoffrey Chukwunenye and Ven. H.U Nnaoma respectively.
“The synod unequivocally condemns the current changes initiated by the Governor of CBN, which promote Islamic/Sharia banking in Nigeria. This is contrary to Section 10 of the 1999 Constitution of the Federal Republic of Nigeria,” the Diocese stated.
The church reminded the CBN governor that Nigeria was a secular state and implored the federal government and National Assembly to be mindful of the implications of imposing Islamic banking on this nation.
The conferees urged government and the lawmakers to prevail on Sanusi to drop this proposal, saying it infringed on the fundamental rights of all the faith-based organizations in the country.
Condemning the spate of violence in some parts of the North, which claimed precious lives and property, the synod demanded that churches destroyed in the mayhem be rebuilt by government and all the victims adequately compensated.
Source: Vanguard, 7th July 2011.
Muslim Lawyers Commend Sanusi on Islamic Banking
BY CHIMEZIE ENYIOCHA
The Muslim Lawyers Association of Nigeria (MULAN) has commended the Central Bank of Nigeria (CBN) governor Sanusi Lamido Sanusi for continuing with the foundation laid by his predecessor Chukwuma Soludo on Islamic banking.
The group dismissed the allegation that the CBN governor is introducing the non-interest banking as part of the alleged northern agenda, as baseless and totally uncalled for, stating that Islamic banking will not Islamise the country but rather will be beneficial to all.
In a statement signed by its national president, Tajudeen Olaseni Oladoja, the group encouraged Muslims and other people to invest their money and to become partners in order to share profits and risks in the business instead of becoming creditors.
While noting that Islamic finance is based on the belief that the provider of capital and the user of capital should equally share the risk of business ventures, such as industries, farms, service companies or simple trades deals, it stated that Islamic banking is about removing the practice of interest which is not only unique to Islam.
"Islam is not the only religion that denies or prohibits usury; it is perhaps because the rules of prohibition are quite prescriptive and structured that it has achieved world prominence in a short space of time.
"Islamic financial institution is based on religious injunctions preached by all monotheist religions including Hinduism, Christianity and Islam. It prohibits usury, gambling, cheating, among others," the statement said.
According to the organisation, Islamic banking has entered a sphere of finance and economics that has been unexplored for the last two centuries and has evidently become the fastest growing sector in finance all over the world.
The statement further pointed that the non-interest banking was approved by the former CBN governor Chukwuma Soludo before the emergence of Mr Sanusi in 2009 and therefore condemned in strong terms the unwarranted condemnation of the CBN governor over the introduction of Islamic banking in Nigeria.
"A calm and thorough reading of the clear provisions of section 9, 23, and 52 of Banks and other Financial Institutions Act, Cap B3 LFN 2004 provided for the establishment of Islamic banking in Nigeria. It was in consequence of these provisions that, the former Habib Bank now Bank PHB was given an approval in 1992 to operate a window of Islamic banking, which is still operational," it said.
Source: Next, 7th July 2011.
Islamic Banking is Retrogressive, Imo Christians Insist
By Uche Nwosu Correspondent, Owerri
Christians in Imo State have condemned the planned establishment of Islamic banking in Nigeria, describing it as an impossible construct and unmitigated effrontery to the nation’s constitutional secularity.
“Nigerian is a secular state that allows different groups to pursue their religions without molestation,” Christians in Imo State through the chairman of Christian Association of Nigeria (CAN), Imo state chapter, Bishop Cosmos Iluchukwu posited.
In an interview in Owerri, Iluchukwu dismissed the notion by the governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Mohammed Sanusi that Nigeria is a multi-religious country and argued that the nation is rather a secular one that recognizes and respects the multi-religiosity of its citizens.
“To allow Islamic banking in the country is an invitation to chaos as other religious groups can also call for their referred banking system. One is compelled to ask whether Sanusi is an Islamic cleric or a professional banker hired by the government to oversee the banking sector of our economy.” He therefore urged the Federal Government to stop the planned Islamic banking as well as all religiously motivated divisive actions disguised as banking reforms; even as he contended that in the countries where the Islamic banking has been operational, they have remained largely under developed.
“It will destroy our economy. Secondly, there is no country in the world where the banking system is practiced that can be considered progressive in any way”, he added.
On jumbo pay for lawmakers, Iluchukwu warned that no arm of government should be allowed to set salaries and allowances for itself, adding that the national emolument commission should be allowed to do this.
The cleric warned against allowing legislators at the federal level to go home with N45 million quarterly. He rather suggested that the N18, 000 minimum wage should be paid by all state government without delay and without conditions.
Source: Daily Independent, 7th July 2011.
Islamic Banking: CBN Rejects Al Qaeda Request for Banking Licence
…Says Islamic banking politicized
…Asks antagonists to go to court
Emma Ujah, Abuja Bureau Chief
Amidst fears that the proposed Islamic banking system, may create an avenue for terrorist financing in Nigeria, the Governor of Central Bank of Nigeria, CBN, Mallam Sanusi Lamido Sanusi, Monday revealed that a group had earlier in the 1990s, applied for licence to establish an Al Qaeda Bank in the country but was not approved
The CBN chief who disclosed this at the opening of an international conference on Islamic Banking in Abuja, said that the group’s application was turned down for failing to meet requirements for banking licence.
Another group that applied for licence to establish another Islamic Al Barka Bank, was equally turned down, Mallam Sanusi said.
His words, “in the early 1990s two applications were received and processed for Islamic banking licence: Al Barka Bank and Al Qaeda Bank. However, those two banks could not meet the requirement for the grant of a final licence”.
But the governor insisted that he would pursue the current move for the establishment of Islamic banks in the country unless stopped by a law court, as according to him, the history of Islamic banking dated back to 1991.
“The history of Islamic Banking in Nigeria dates back to 1991 with the promulgation of BOFIA, Banking and Other Financial Institutions Act which provided the legal guidelines for the regulation of non-interest of profit/loss sharing banking in the country”, he said.
Mallam Sanusi added that by 1996, the then Habib Bank sought and obtained CBN approval to operate Islamic banking model.
Also Jaiz, a company that has been promoting Islamic banking in Nigeria, “got an approval in principle in 2004 but could not take off due to lack of capital”.
He said that the CBN under his administration was not promoting Islamic banking but only doing its duties of providing necessary guidelines to ensure adequate regulation for its operations.
His words, “we have the responsibility to continue to explain that the CBN is neither promoting nor establishing an Islamic bank. The CBN is licensing and regulating Islamic banking and that is under the law”.
Mallam Sanusi said critics of Islamic banking were politicizing the issue based on religion rather than looking at it from the economic perspective.
“I think it is because of Nigerian politics- highly divided, highly sectarian. I think we are in the habit of using every opportunity to exploit religion or ethnic difference for political ends”, he said.
The governor said that the CBN was acting within the Provisions of the Banks and Other financial Institutions Act, BOFIA, and that those who felt otherwise should go to court.
“Anybody who feels Islamic banking is illegal should go to a court of law because it is only the court that decides if something is illegal or not. If a court says it is illegal, we will stop it.
“But we don’t think the court will say so because we know it is within the realms of the law. It is only a court of law that can make a pronouncement on the legality of anything”.
In his welcome address, the CBN Deputy Governor , Financial System Stability, Dr. Kingsley Moghalu made effort at convincing the audience that Islamic banking was not a ploy to Islamize the nation.
He said the banking model existed in countries with Muslim minorities such as the United States of America and the United Kingdom.
He said the risk sharing principle would lend the bank’s resources for huge infrastructure projects in the power and transportation sector.
He said that Nigeria had become an Executive member of the Board of the Islamic Development Bank, IDB, and would benefit from the near $ 1 trillion assets of Islamic banks across the globe. Mr. Isamil Toure who represented the President of the IDB, Dr. Ahmed Ali said that with the population of Nigeria, it would become the largest market for Islamic banking as well as IDB financing.
Source: Vanguard, 5th July 2011.
NON-INTEREST BANKING CONTROVERSY
NON-INTEREST banking, otherwise known as Islamic banking has understandably generated a lot of controversy in the country as a result of the policy equivocation that witnessed its introduction.
IN spite of the various amendments to the initial guidelines on the establishment of non-interest banking by the Central Bank of Nigeria (CBN), the disquiet and scepticism among Nigerians have refused to abate.
AS enshrined in the Banks and Other Financial Institutions Act (BOFIA) 1991, as amended, the establishment of a non-interest banking institution which is legally specified as “profit and loss sharing banks” is absolutely constitutional. Section 29(1) stipulates that “Except with the written consent of the Governor of the Central Bank of Nigeria (a) no bank shall, as from the commencement of this Decree, be registered or incorporated with a name which includes the words “Central”, “Federal,” “Federation”, “National”, “Nigeria”, “Reserve”, “State”, “Christian”, “Islamic”, “Quranic”, “Biblical”.
THIS act, despite its unrestraining power to the Central Bank Governor in the granting of licence for the incorporation of commercial banks, must have anticipated that such approving officer like the Central Bank Governor should have been imbued enough with the wisdom of considering the religious sensibilities of Nigerians.
THE initial guidelines issued by the Central Bank of Nigeria (CBN), on the incorporation of the Islamic Banking Institution, we observe, contained a lot of religious connotations, which are visibly anathema to the constitutional secularity of the country. Even the expunction of the troubling aspects of the guidelines has not totally removed the anxiety of some Nigerians as to the ulterior motives of this Islamic banking project.
FOR the Central Bank Governor, who is a highly rated Muslim scholar and sharia expert, to have introduced this banking system at a volatile period in the annals of Nigeria, we say, cannot expect less suspicion from non-Muslims and even moderate - Muslims. Despite the highly hyped advantages of the non-interest banking, we are sure that the governor is not unaware of the attendant problems associated with its practicability in a secular state like Nigeria. First, Islamic banks do not hold government securities as part of their liquid assets; this singular shortcoming, among others, will naturally precipitate holding substantial non-income earning cash reserves, which will ultimately reduce the banks’ returns on accumulated assets. Even the use of monetary policies to achieve economic equilibrium will be dampened, as bank rate which relies on the manipulation of interest rates cannot be applicable to the Islamic banking.
IN fact the controversy among the Muslim economists as to the Quranic interpretation of interest charging is still very potent. While some strongly argue that the Quran only forbids usury (excessive interest) and not riba (interest), many believe that interest charging on loans is a mortal sin that should be abhorred with all tenacity.
THE introduction of Islamic banking into the highly organised Western economy, despite its initial enthusiasm and expectations of attracting petro-dollar and capital funds was discovered to be a disaster as it was noted that interest-free banking could not meet corporate financing on the basis of profit and loss sharing relationship. That non-interest banking could only, at best sustain the trade financing in form of mark-up and to some extent, higher purchase and in most cases leasing. With the plethora of banking reforms embarked upon by the Central Bank, coupled with Nigeria’s weak banking culture, we wonder if the system will be strong enough to withstand completely new banking arrangements without totally dislocating the economic pedestal?
HOWEVER, without prejudice to the aspirations of the promoters of the non-interest banking in Nigeria, we like to admonish that the composition of Board of Directors must be such that will reflect genuinely the secular nature of Nigeria. Employment opportunities must not be based on religious adherence as this will be a clear vitiation of the country’s constitution which forbids employment on the basis of religion, creed or colour.
THE monetary authorities must be very cautious in ensuring that the funding of the proposed non-interest banking is not from doubtful sources, especially the fanatical groups who may want to advance their religious cause at the expense of the country’s stability.
MOST importantly, the CBN needs to embark on aggressive public enlightenment to disabuse the religious stigma already attached to this project, which, of course, emanated from the suspicious but needless haste with which, the monetary authorities chose to force Nigerians with this alien financial system.
THE consideration of these conditions and other unifying factors, we believe, are the sine qua non of the country’s economic and sovereign solidity.
Source: Tribune, 4th July 2011.
CAN Faults Introduction of Islamic Bank
By Frank Akatakpo, Warri
The Christians Association of Nigeria, Delta State chapter, has faulted the introduction of Islamic Bank in Nigeria, saying as a secular country Nigeria was not ripe for the mode of banking.
The group led by a frontline Christian leader Archbishop Goddowell Avwomakpa, who is the state Chairman of CAN and National Vice President Christians Association of
Nigeria South-South carried out a protest march in the oil city of Warri over the weekend.
The group, who later converged at the headquarters of Word of Life Bible Church, in their desire to voice their protests to the National President of CAN, Pastor Ayo Oritsejafor, was received by Professor (Pastor) Gabriel Yomere who promised to express their grievances to the appropriate quarters.
Source: The Nation, 4th July 2011.
CAN Fears Nigerian Islamization via Banking
Thursday, July 7
LAGOS, NIGERIA (Worthy News)– The Christian Association of Nigeria said a proposal by the Central Bank of Nigeria to introduce Islamic Banking is part of a hidden agenda by Muslims to Islamize the nation.
Bishop Goddy Okafor, CAN Chairman, Abia State Chapter, called on President Goodluck Jonathan to prevent this “evil proposal,” claiming that Islamic banking would create chaos in Nigeria.
“Nigeria is a secular state,” he said. “Islamic banking should be practiced purely in Islamic countries; it is not acceptable to us here. If we must remain one Nigeria, this must not happen … to introduce a banking system to a particular group is dividing the country. Tomorrow, if allowed, they will divide schools. Nigerians and President Jonathan should not allow it, else they are calling for chaos.”
Okafor also raised the alarm about the violent activities of the Islamist sect Boko Haram; he called for immediate action to stop both it and its sponsors no matter how highly connected in the government they are.
Source: Worthy News , 4th July 2011
Nigeria: CBN is Not Establishing an Islamic Bank - Governor
Central Bank of Nigeria (CBN) Governor, Malam Sanusi Lamido Sanusi, has explained that the apex bank is in no way promoting or establishing an Islamic bank in Nigeria, contrary to speculations in some quarters.
Sanusi made the clarification on Monday in Abuja, at a two-day International Conference on Non-Interest Islamic Banking.
"The Central Bank is not promoting or establishing Islamic bank, the Central bank is simply licensing and regulating an institution that is allowed to exist under the law.
"To the extent that this bank is not allowed to deny anyone the opportunity to be a stakeholder and to the extent that they do not deny anyone to set up his own bank.
"There is absolutely no discrimination. We have to continue making that point, hopefully, people will get to understand with time," he said.
Sanusi's clarification came on the heels of the defense of Secretary-General, Nigeria Supreme Council of Islamic Affairs (NSCIA), Lateef Adegbite who described criticisms trailing the move to set up an Islamic banking system in the country as non-objective and uninformed.
Adegbite, who expressed his views in a press statement made available to the News Agency of Nigeria (NAN) on Monday in Lagos, said the criticism rife with religious intolerance.
According to him, Islamic banks provide an alternative banking facility for those who do not patronize conventional banks because of the interest charged by the latter.
He said that the facility would allow Nigerians "to access a less intimidating banking system that is ethical in its operations and guarantee returns".
He urged the critics to embrace the truth, understand and have mutual trust in their Muslim counterparts in the interest of harmonious co-existence in the country.
Yet CBN governor maintained that those who felt that what the apex bank was doing was illegal, should go to the court of law.
According to him, the bank will stop the establishment of non-interest Islamic banking if the court says it is illegal.
"But we don't think the court will say so because we know we are acting within the realm of the law but it is only the court of law that can make a pronouncement on the legality of anything.
"So if anybody says it is illegal, then he should go to the court of law and let the law pronounce the legality or illegality of it," he said.
Sanusi said that the non-interest banking had been practiced in about 435 institutions and in about 75 countries in the world.
He said that with the guidelines in place, Nigeria was set to join the league of other countries to benefit from the non-interest banking.
To ensure effective operations, he said, Nigeria had joined the Islamic Financial Service Board and ensured collaboration between Securities and Exchange Commission (SEC) and Nigeria Deposit Insurance Corporation (NDIC).
He added that the apex bank had also signed a Memorandum of Understanding with Bank of Malaysia on issues of "regulator cooperation and collaboration."
He said that ethno-religious diversity of Nigeria called for mass awareness, as misconception of the concept might jeopardise the process.
"For us in the CBN, we will like this conversation at the conference not to be a conversation between Muslim and Christians because Islamic banking is a universal product.' We will like it to be conversation on finance, economics; it is about deepening the financial system and enhancing financial system stability and financial access," he said.
Mr Kinsley Moghalu, CBN Deputy Governor, Financial System Stability, said that there was no need to express fear about the introduction of the non-interest Islamic banking in the country.
He said that the operation was based on pure business preposition and universal accessibility for all purpose irrespective of religion, culture, race or gender.
"As a value proposition, it is faith, gender and religious blind. Non- interest Islamic banking is offered in western and financial centres such as London, Japan and Singapore," he said.
He said that global institutions such as Citi Bank and Standard Chartered Bank were among the foremost providers of the non-interest banking in the world.
Moghalu said that the establishment of the non-interest banking was in line with the financial system strategy of the Federal Government aimed at strengthening the sector.
He added that establishing the non-interest banking was an opportunity for artisans who could not fit into the conventional banking to benefit and contribute to the growth of the sector.
Moghalu gave an assurance that the apex bank would comply strictly with guidelines and proffer a level playing ground for smooth operation of the bank.
Also speaking, Mr Danladi Kifasi, the Permanent Secretary, Federal Ministry of Finance, said that non-interest banking was all about profit and loss and ability to develop trust.
He said that it was not a religious product and would be another potential avenue for employment creation in the country.
Adegbite had contended that Islamic banking would usher in a new era of economic wellbeing in the country and provide attractive returns by way of profit sharing as opposed to interest taking.
Adegbite urged critics to support its introduction, saying the bank would neither discriminate nor operate as a closed shop but would be open to all in terms of ownership and patronage.
Source: Daily Champion, 4th July 2011
Back
CBN Allays Fears on Islamic Banking
By Demola Akinyemi
Ilorin— The CentralBank of Nigeria, CBN, has allayed fears that the introduction of non-interest banking into the system would turn Nigeria into an Islamic country, stressing that Islamic banking is one of so many non-interest banking systems contained in the CBN laws.
Deputy Governor, Economic Policy of CBN, Mrs Sera Omotunde Alade, said this, weekend, in Ilorin while speaking with newsmen at a retreat organised for the Financial Market Department with the theme: ”Transforming the Nigerian Financial Market: Prospects and Challenges.‘’
According to her, apart from the Islamic banking, which is a non interest banking system contained in the laws of the bank, there are other forms of non-interest banking for which interested parties can come forward to get licence.
She said what was contained in the law is non-interest banking which is synonymous to Islamic banking but that giving licences to operate Islamic banks does not have anything to do with changing the country into an Islamic nation.
Alade also said what the country was interested in was how to change the face of banking in a way that the economy could grow for the betterment of all Nigerians.
She urged all Nigerians to see the licensing of the non-interest banking in the country as a new step to move the country’s economy to a greater height.
She also called on those who are interested in other forms of non- interest banking to come forward for licence from the apex bank.
On the issue of financing agriculture by the CBN, the deputy governor said the bank had been assisting commercial farmers with the aim of producing in large quantity for export.
In his address, Director of the Finance Market Department of CBN, Mr Olajide Owolabi, said the CBN created the financial market department in 2010 with the aim of creating a world class market in Nigeria, adding that the department had within this short period achieved a moderate effort in the areas of successes recorded.
He said the retreat would further assist the department and the bank in reviewing their performance and address the challenges created in order to further improve on the efficiency of the financial market .
Earlier in his address of welcome, Branch Controller, Ilorin Branch, Mr Onoriode Monday Olotewo, said the theme of the conference could not be discussed at a place that is more appropriate than the retreat based on the global meltdown in the recent past that had affected the financial market.
He said the Nigerian financial market was not insulated rom such problems as as it had been faced with many challenges.
He urged the participants at the retreat to make good use of the opportunity in ensuring that the challenges facing the financial market are overcome .
Source: Vanguard, 27th June 2011.
Islamic Banking: CBN May Face Legal Battle
By Obinna Chima
Just like the process leading to the recapitalisation of the rescued banks, there are strong indications that the planned i
ntroduction of Islamic banking into the country may be trailed by a barrage of legal tussle.
THISDAY gathered that various pressure groups and even religious bodies have concluded plans to drag the apex bank to court over the form of non-interest banking.The source who maintained that the decision to establish the first Islamic bank in Nigeria was against the unity of the country, added that his association will ensure that they throw spanner in the works of the CBN.
According to the source, the proposal is completely against the Federal Character Principle entrenched in Section 14(3) which states that: “The composition of the Government of the Federation or any of its agencies and the conduct of its affairs shall be carried out in such a manner as to reflect the federal character of Nigeria and the need to promote national unity, and also to command national loyalty.”
Islamic Banking is a non-interest type of banking that is different from the conventional banking in so many ways. It is based on Islamic law of economics and works in such a framework that follows certain rules and regulations. This form of banking also proscribes usury, trading in financial risk (gambling) and investing in such businesses that are against the general principles of ethics.
Chief Executive Officer, Pharez Consulting, Mr. Eghes Eyieyen, stated that with the proposed introduction of Islamic banking, the CBN plans to foist on the nation, a needless controversy.
Eyieyen who said this in a report e-mailed to THISDAY, also argued that with the move, the apex bank purportedly assumed legislative powers which it does not have.
CBN Deputy Governor, Financial System Stability, Dr. Kingsley Moghalu, had assured Nigerians the CBN did not have any ulterior agenda in it plans to introduce Islamic banking.
Moghalu had explained: “I will like to very clearly assure Nigerians that non-interest banking is part of our plans to increase the inclusion into the financial, people who have stayed out of the financial system for various reasons. There is no agenda; it is simply finance and not about religion. I want to further assure Nigerians very clearly that non interest banking is open to people of all faith and all types of non-interest bank application are welcomed at the CBN.”
Source: This Day, 29th June 2011.
CBN Stirs Fresh Dust Over Islamic Banking
BY UDEME CLEMENT
The plan by the Central Bank of Nigeria (CBN) for Islamic banking in the country notwithstanding the opposition in some quarters has taken a new dimension with the pronouncement of N10 billion capital base requirement for any Islamic bank applying for licence to operate nationwide even as it further announced N5 billion capital requirement for an Islamic banking licence for regional operations. The CBN explained that it has the power to license Islamic banks in the country as stated in the CBN Act and Bank and Other Financial Institutions (BOFIA), duly passed into law by the National Assembly.
Accordingly, the Banks and Other Financial Institutions Act (BOFIA) 1991 as amended in Sections 9, 23 and 52, provide for the establishment of Islamic banking in the country. In that capacity, the former Habib Bank was granted an approval in 1992 to operate a window of Islamic banking which is still operational with Bank PHB. Thus, the approval by the CBN under former CBN Governor Charles Soludo saw the emergence of the proposed JA’IZ Bank, which has been working to raise 25 billion naira capital base as required (under BOFIA), showing that Islamic banking system was already in Nigeria years before the emergence of Sanusi as governor of the CBN.
The apex bank had, on December 31, 2010 and January 12 2011, published the guidelines on Shariah governance for non-interest financial institutions.
The policy framework as stated by the monetary authority aims at providing minimum standards for the operation of institutions offering non-interest banking and financial services in the industry to stimulate massive investments in the country. While some stakeholders are of the opinion that non-interest banking would bring long terms economic benefits to Nigeria, others said that such business practice must be condemned to prevent religious sentiments and division in the country, especially as Nigeria is highly sensitive to sectarian politics and religious conflict. Stakeholders who spoke with Sunday Vanguard expressed their views:
Non-interest banking would benefit Nigeria’s economy in many ways – Santigie Charles Conteh: Ministry of Finance Sierra Leone.
What people should realise is the fact that Islamic banking has a lot of incentives for countries practising it. This type of banking technique is not totally new to the system, but it is just a banking model that is interest rate free and people are also free to make use of what product they want in the financial sector. Non-interest banking is a unique form of banking under the specialised banking model designed to promote development of Small and Medium Enterprises (SMEs).
This is because the entrepreneurs who are into SMEs operate on a smaller scale, sometimes with low capital for investment especially in the areas of start-up. This type of banking model would help them because they do not have to pay high interest rate charged by the commercial banks doing business in the country. What Nigerians should do is to carefully evaluate the new product to see what it entails and what the economy stands to benefit in the long-run.
CBN should not implement Islamic banking in a hurry – Rechard Tinubu, management and financial consultant to Osun State Government.
Because it is called Islamic banking, there is tendency for people to bring religion into it. For me, the CBN should not be in a hurry to introduce the model. The apex bank should allow time for people to examine the new banking system to see how it would benefit investors and government in the long-run expectation.
The apex bank is an agency of government charged with the responsibility of regulating the financial sector, which is a continuous process and an institution of the state. So, for effective policy implementation and for the leadership to continue to create wealth among the citizenry, government must continue to look inward with a view to satisfying the yearnings of the people in the area of welfarism geared towards infrastructure renewal. Hence, the apex bank should carry the people along in introducing new banking model.
In a developing economy like Nigeria, the government needs to invest in infrastructure, public goods and capital projects to stimulate economic growth and development. This requires efficient banking industry capable of financing capital projects in different locations across the country. The government should continue to develop the nation’s domestic bond market in such a way that the private sector players could borrow to invest and finance projects with long term benefits. This could pave way for sustainable growth in the economy.
There should be level -playing field – Silas Onuoha Igwe: Non-interest banking model should not be introduced for the muslims only. The monetary authority should ensure a level playing field for all investors to benefit from the new banking model. The non-interest banking system should be adequately structured to promote development of small and medium enterprises in the country.
This is because Nigeria has a population of over 140million people and majority are youths, so CBN should give priority to SMEs to enhance jobs creation. If adequately implemented, the new model would be a way of encouraging entrepreneurial development in the economy. The moment this is done, most people would become employers of labour and this would further tackle the problem of unemployment in the country. Government should as a matter of urgency map out a structural framework to diversify the economy into non-oil export sector in order to develop the agricultural sector, which has the capacity to create thousands of jobs for the citizens.
The CBN should also look at the statistics in the area of small and medium scale operators – Boniface Amobi of National Bureau of Statistics, Presidency, Abuja: The initiative by the CBN to introduce a new model, which would bring additional product to the banking industry should not be condemned because the economy needs holistic growth.
I commend the effort of CBN in financing data production in the country. Economic growth and development requires credible data to help government in making decision on what basic infrastructures are needed and appropriate locations to put public goods for the benefit of the citizens. Government should make data production a national issue with sufficient revenue allocated for it and not just a project financed by the Central Bank of Nigeria (CBN) alone. The apex bank should ensure adequate use of data in the on-going banking reforms.
Source: Vanguard, 26th June 2011.
Bishop to CBN Boss: Your Job or Islamic banking
From NOAH EBIJE, Kaduna
Chairman, Pentecostal Fellowship of Nigeria (PFN), Kaduna State chapter, Bishop David Bakare, has advised Governor of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi, to resign from office before advocating the introduction of Islamic banking in the country.
In a statement yesterday in Kaduna, Bishop Bakare said that Sanusi would be better off in the Islamic banking agenda if he (Sanusi) were a religious leader.
The fire-spitting cleric therefore, advised the CBN boss to choose between the idea of Islamic banking and his job at the nation’s apex bank, saying that advocating for a religious banking at this time of political crisis in the country could aggravate the tensed situation.
According to the statement, “Honestly, if Governor Sanusi Lamido Sanusi had done this advocacy for Islamic banking as a religious leader, it would have made a better sense than as a government official. Therefore, Sanusi should come out and tell the nation whose errand he is running and for who he speaks; is it for himself, Islam, or government of Nigeria?
“The PFN, Kaduna State, strongly condemns the Central Bank governor’s Islamic banking agenda at a time like this in Nigeria when we are still battling to douse the tension created by the last ‘political’ crisis with all the evident religious manifestations.“This obviously is an insensitive and reckless act of the highest order coming from such a high ranking officer of the Federal Republic of Nigeria.
“No right thinking Nigerian would ordinarily venture into such a sensitive matter at any time in such a nation like Nigeria without an evil motive to create more tension in the nation or worse still to start another religious fighting such as had never been before in this nation.“Somebody, please, help tell Sanusi to let the sleeping dog lie, and not put the nation into another avoidable distraction and dangerous crisis. We call on President Goodluck Jonathan not to wait until trouble begins before acting,” Bishop Bakare said.
Source: Sun, 26th June 2011.
Sanusi, PFN disagree over Islamic banking
Written by Hassan Ibrahim
The governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, has said that those opposed to the introduction of Islamic banking in Nigeria are not conversant with current happenings in the world as the system is being practised in the United Kingdom and other countries of the world dominated by Christians.
He spoke on the BBC Hausa service monitored in Kaduna at the weekened, even as the Kaduna State chapter of the Pentecostal Fellowship of Nigeria (PFN) expressed concern over moves to introduce Islamic banking in the country.
The PFN while condemning the move said the action of the CBN governor at a time when Nigerians were still battling to douse the tension created by political and religious crises was unfortunate.
However, Sanusi explained that the move for the introduction of the JAIZ Bank in Nigeria had been on even before he assumed leadership in the CBN and disclosed that other superior officers in the CBN who were Christians had no problem with Islamic banking in Nigeria.
According to him, a major stakeholder in the JAIZ Bank was an Igbo businessman who saw the prospects and had since invested a lot towards the noble cause.
Nigerians, he said, should not be afraid of Islamic bank as it was going to be a non-interest banking which had been practised successfully in many parts of the world.
But the PFN in a statement by its chairman, Bishop David Bakare, said that the action of the CBN governor would further polarise the nation along religious lines as well as raise suspicions about his intention no matter how good it could be.
“Honestly if the CBN governor had embarked on this advocacy for Islamic banking as a religious leader it would have made a better sense than as a government official. Therefore, he should come out and tell the nation whose errand he is running and for whom he speaks. Is he speaking for himself, Islam, or for the government of Nigeria?
“ Sanusi should please be advised not put the nation into another avoidable distraction and dangerous crises. We call on the president not to wait until trouble begins before acting,” he said.
Source: Tribune, 26th June 2011.
Back
Much ado about Islamic banking
By Ibrahim Apekhade Yusuf
The rash of criticisms notwithstanding, proponents of the Islamic banking model in the country are convinced that it is a welcomed development owing to its socio-economic benefits, reports Ibrahim Apekhade Yusuf
Perhaps, as a manifestation of the apex bank’s commitment to its "new found love", it subsequently issued a revised guideline on non-interest banking as well as prescribed a capital base requirement of N10 and N5 billion for all prospective Islamic banks applying for national and regional licences respectively in the country on Wednesday.
ABC of Islamic banking
But what really is Islamic banking all about?
Global acceptance
Islamic banking and finance practice according to Adegbite, who was a former Attorney General of the old Western region: "Is no longer limited to the Arab and the Muslim worlds but has spread to the Far East, Asia, Europe, America and Africa. It is estimated that there are more than 200 non-interest financial institutions operating in about 75 countries across the globe.
Market size
Though it is said to constitute less than five per cent of the global financial market, the Islamic banking and finance market was growing between 15-20 per cent before the world economic recession of 2008 and thereafter at an average of 15 per cent p.a. In the last four decades, the system has evolved from a small niche visible only in Islamic countries to a profitable, dynamic and resilient competitor at an international level.
Regulation
Although there are still challenges regarding uniform regulation of Islamic banking and finance, a lot has been achieved by countries that have been in the forefront such as Bahrain, Malaysia, UK, as well as other organizations purposely established to help regulate and standardize Islamic finance practice.
Benefits/opportunities
The basic principle of Islamic banking is the sharing of profit and loss as opposed to charging of usury (interest). For example, when it comes to the profit from the financing of a project, the financier and the beneficiary share the actual or net profit/loss rather than throwing the risk burden only to the entrepreneur.
Arguments against Islamic banking
Laudable as this initiative may seems, the irony, however, is that a barrage of criticisms has greeted what many proponents of this new scheme described as a "welcomed addition" to the country’s financial system.
A case for Islamic banking
Despite the welter of criticisms against the Islamic banking, its promoters are unfazed by this development, as they believe that it is an idea whose time has come.
According too Adegbite: "Countries all over the world are falling over themselves to establish the banking product. Nigeria therefore cannot be an exception. Indeed as we aspire to be among the twenty leading Economies of the world, we need to equip our financial system adequately by providing the facilities which the extremely mobile world investors would require anytime and anywhere, they find themselves in the conduct of their businesses."
Expatiating, he said: "Indeed, such is the status of Nigeria in the world that she must not lag behind in financial creativity and must avail itself of all opportunities the global financial system has to offer. In Population, Nigeria is sixth largest Muslim Country in the World coming after Indonesia, Pakistan, India, Bangladesh and Egypt. Such a leading Muslim nation cannot rightly carry on without Islamic Banking System for her teaming Muslim population, and a good number of non-Muslim Nigerians and non-Nigerians alike who desire to have access to non-interest banking.
"In as much as the Islamic banking system envisaged for Nigeria would be non-discriminatory, making its facilities open to and available to all Nigerians regardless of faith, the institution would be legal and constitutional. It should be emphasized that the pioneer non-interest Bank which Jaiz International Plc is poised to establish in Nigeria as soon as it receives a banking licence from the Central Bank of Nigeria, may be Islamic in concept and nature, it is certainly not a closed shop, available to Muslims only.
"Rather it would be a bank owned by Muslims and non-Muslims; its customers will also be drawn from all sectors of the community regardless of faith", Adegbite submitted.
Apparently throwing its weight behind the new policy regime, CBN said the new phase of reforms will positively impact on the provisions and requirement of Islamic banking, and ultimately hasten the progress of that arm of banking.
Mohammed Abdullahi, spokesperson for the CBN, shed more light on this while clearing the air on insinuations that Islamic banking was an agenda of Sanusi-led CBN.
"This policy has been on for about three years and has been approved in principle for some time now. I can recall that Jaiz International Bank Plc has been given approval in principle to operate as an Islamic Bank. All that the Central Bank is waiting for them to do is to mobilise their capital base of N25 billion required for operations in the Nigerian banking system", he recalled.
He also noted that under the current reforms, banks have been falling in line with the CBN requirement, adding that the recent announcement on the categorisation of Nigerian banks for bank specific solutions will boost Islamic banking operations.
"I believe that Islamic banking or zero interest banking would fare very well under that arrangement and it is possible that they may not be required to raise exactly | 25 billion before they can start operating. Islamic banking and the Central Bank are trying to introduce a supervisory framework for easy supervision," he said.
He added that the CBN will rely much on the success and experience of the Negara of Malaysia. "They have gone far in the operations of Islamic banking and I believe we have a lot to learn from them, and we hope to use their experience to develop our own locally. As soon as that is done, everything would become clearer. Islamic banking has been provided for in the Banks Act and Approval-in-Principle has already been given during Soludo’s time," he said.
Apart from Jaiz International, he also revealed that BankPHB was also given approval in principle to operate Islamic banking, and has been operating the system for some time now.
Bank PHB offers the classic Bank PHB interest free account. A statement on the bank’s website said, "This product is designed for Muslim faithful desiring banking services without compromising their religious beliefs."
Considering the raging controversy over the propriety or otherwise of Islamic banking, this may not be the end of this tempestuous episode.
Evidence that the new CBN’s baby did not gained wide acceptance emerged on Wednesday at a public forum in Lagos, with many of those averse to it raising their voices above the din, in apparent show of discomfiture.
The event was at a seminar orgainsed by the Apostles in The Market Place (AiMP), where the CBN’s Deputy Governor, Financial System Stability (FSS), Dr. Kingsley Moghalu, had a hectic time trying to convince the aggrieved parties on the propriety of the idea of Islamic banking.
Moghalu who spoke on the theme: ‘Re-Purposing Non-interest Banking in Nigeria’, emphasised that Islamic banking and other forms of non-interest banking were part of effort by the apex bank to stimulate financial inclusion in the country.
Non-interest banking is not new banking model he said, adding: "It is a form of banking under specialised banking model. The reason for an expert advisory council in the guideline is because of the nature of non-interest banking under the principle of Islamic commercial jurisdiction. All banks that are Islamic banks have that type of council. So the regulator in this context felt the need to have a council that advises it on the compliance of the products that those banks will issue with the principle of Islamic commercial jurisdiction.
"I will like to very clearly assure Nigerians that non-interest banking is part of our plans to increase the inclusion into the financial sector, people who have stayed out of the financial system for various reasons. There is no agenda; it is simply finance and not religion. I want to further assure Nigerians very clearly that non-interest bank application is welcomed at the CBN", he further explained.
But the Chief Executive Officer, Pharez Consulting, Mr. Eghes Eyieyen, who spoke earlier argued matter-of-factly that the introduction of Islamic banking was against the provisions in Banks and Other Financial Institutions Act (BOFIA).
Raising a poser, Eyieyen said: "What is the inordinate drive and ambition behind the introduction of Islamic banking? To me, it seems as if the CBN is in a hurry to introduce it and why does the CBN think it is going to be a major driver of financial inclusion? It is not about religion, it is about the law and professionalism. Why has the CBN not given such passion and priority to the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN)? You cannot use a small provision in the BOFIA that gives you the power to regulate, to now begin to legislate."
Echoing the same views, an Associate Professor of Law and Security Studies, Babcock University, Dr. Bankole Sodipo, also argued that the CBN Act and BOFIA, in issuing out regulation on non-interest banking, did not support Islamic banking, saying that the banking sector regulator must ensure that the National Assembly legislate on the form of non-interest banking.
"The way forward is to look at the BOFIA and ensure that the move is in line with the Act. On the Advisory Council, there is no way they can delegate the decision making of the body to another body because the National Assembly doesn’t give them that power. The law does not regulate that form of banking because it shut some people out. You don’t give what you don’t have and so you cannot give out what is not your own. What it means is that the CBN wants to introduce a form of banking through the backdoor", Sodipo argued.
Another group that has vehemently opposed the introduction of Islamic banking is members of the Christian community.
One of these critics, the Anglican Bishop of Enugu, Rt. Rev. Emmanuel Chukwuma who spoke to newsmen in Enugu recently, also warned the CBN not to approve the establishment of the bank, insisting that the emergence of a religious bank would pose serious threat to the unity of the country.
Chukwuma, the bishops and the Primate of the Anglican Church, Most Rev. Nicholas Okoh, had rejected Islamic bank after their meeting recently, saying that they did so because of its "religious connotation."
The bishops also argued that the CBN was not constitutionally empowered to establish an Islamic bank, pointing out that the bank would contravene the CBN Act.
Bishop Chukwuma disclosed that the Anglican Church would embark on a protest if the apex bank ignores its position on the issue, warning that they would equally pass a vote of no confidence on CBN if it approves the bank.
He insisted that there was no need to establish an Islamic bank in a multi-religious country like Nigeria, saying that the coming of the bank would only cause confusion in the country.
"Nigeria is not an Islamic country. Islamic bank is unconstitutional because it is not in the CBN Act. We reject the establishment of the bank. It has religious connotation. The Senate and House of Representatives should not pass the bill," he said.
To many financial pundits, Islamic banking and finance has many benefits and opportunities for the entire population of Nigeria, including Muslims and non-Muslim faithful alike.
Some of these include ethical, transparent, non-discriminatory financial offering, high potential market size with Muslims making up over 50 per cent of the population of the 155million population.
Besides, it is capable of encouraging the large unbanked and informal sector, estimated to contribute at least 55 per cent to the country’s GDP, just as it has the potential to offer over 30% return on equity.
Citing a recent IMF study, Adegbite recalled that the global body revealed that Islamic banks performed better in 2008 in terms of profitability, credit and asset growth compared to most of the conventional banks worldwide.
Malaysia has been developing the necessary infrastructure to support the legal and regulatory framework for Islamic finance industry since the 80’s. The Islamic Banking Act was enacted in 1983 and Takaful Act in 1984. The UK (FSA) has also reviewed some of its statutes to accommodate Islamic Finance since 2003.
The industry has also developed self regulatory bodies such as the Accounting and Auditing Organisation for Islamic Finance Institutions (AAOIFI), the Islamic Financial Service Board (IFSB), International Islamic Financial Markets (IIFM) and International Islamic Rating Agency (IIRA) among others.
The AAOIFI which is based in Bahrain issues standards governing accounting, auditing, corporate governance and capital adequacy for the industry. Similarly the IFSB is an international body headquartered in Malaysia with more than 150 members including the IMF, IDB, World Bank for International Settlements, Central Banks, market players and professional firms.
The body issues Standards and Guidelines on risk management, capital adequacy, corporate governance, etc.
In Nigeria, as part of the ongoing reforms of the banking industry, the Central Bank (CBN) has abolished the Universal Banking Model (of the one-size-fit-all minimum capital of N25bn introduced in 2005) and released new guidelines for different categories of conventional banks as well as that of the Non-interest Banking (NIB) or Islamic banking.
The size of Islamic banks around the world was estimated to be close to US $850 billion at the end of 2008. While Islamic banking remains the main component of the Islamic financial system, the other elements, such as Takaful (Islamic Insurance), Mutual Funds and Sukuk (Islamic bonds and financial certificates), have witnessed strong global growth, too.
According to a reliable estimate, the Islamic financial industry now amounts to over US $1 trillion and projected to hit $1.6tr by 2012. Given its fast-growing nature the industry is estimated to double in size in less than a decade – other things being equal.
"Global financial institutions offering Islamic Banking services include HSBC, Citigroup, Deutsche Bank, Standard Chartered Bank, Barclays Capital and ABN Amro. These institutions are leveraging on their skills, resources, expertise and access to capital to drive the Islamic finance industry to higher levels.
"There are also other local/regional banks especially in the GCC countries which have started to expand their operations across their borders into other countries. These include Al-Rajhi Bank of Saudi Arabia, Dubai Islamic Bank, Kuwait Finance House, and Al Baraka Group. In Africa, the countries that have embraced Islamic Banking include South Africa, Egypt, Senegal, Gambia, Niger, Kenya, Tanzania, Algeria, Tunisia, and Benin Republic."
Dr. Abdullateef Adegbite, the Secretary General of the Nigerian Supreme Council for Islamic Affairs (NSCIA), a man who should know better, gave a bird’s eye view of the pros and cons involved in Islamic banking at a public forum earlier this month.
The event was at the Nigerian Institute of Advanced Legal Studies’ colloquium on Islamic banking in Lagos, where the NSCIA scribe spoke on the challenges and prospects.
According to Adegbite, "As most of us know, Islamic banking and finance is based on the principles of Shari’ah, and this notwithstanding, its application and benefits do not discriminate between Muslims and non-Muslims. In fact, its ethical and transparent nature, its simplicity, and its emphasis on fairness and accountability, etc endear it to many.
"Three most distinguishing factors that make Islamic finance unique from the conventional system are: (a) Prohibition of Riba (interest) in all its forms; (b) Risk-sharing; (c) Asset-backed. The last factor eliminates speculation, extreme uncertainty, etc in financing and encourages growth of the real economy – this made it (Islamic Banking & Finance) more resilient during the world economic meltdown!
"Islamic Banking and Finance has become very popular and widely accepted as a reliable financial system that has been integrated into the global financial system. For over three decades it has appeared on the world scene as an active player."
Source: The Nation, 26th June 2011.
Sanusi, PFN disagreee over islamic banking
By Agency Reporter
The Governor of Central Bank, Mallam Lamido Sanusi, and the Pentecostal Fellowship of Nigeria on Saturday disagreed over the decision by the apex bank to introduce Islamic banking in the country.
While the CBN governor said those kicking against the initiative were not conversant with the current happenings across the globe, the PFN said the timing was wrong.
Sanusi who spoke on the Hausa Service of the British Broadcasting Corporation monitored in Kaduna, argued that the move to introduce the JAIZ Bank in Nigeria had been on even before he assumed the leadership of the apex bank, adding that high-ranking officers of the CBN who are Christians were not opposed to the idea.
He noted that a major stakeholder in the new bank was an Igbo businessman who saw the prospects and had since invested in it.
Sanusi enjoined Nigerians not to entertain any fear about the initiative, saying it was going to operate on a non-interest banking as is done in many parts of the world.
However, the Kaduna State PFN Chairman, Bishop David Bakare, in a statement, said the action of the apex bank would further polarise the country along religious line.
Source: Punch, 26th June 2011.
‘Islamic Bank, Plot to Islamize Nigeria’
By Omon-Julius Onabu
Delta State chapter of the Christian Association of Nigeria (C.A.N.) has alleged that the decision to establish the first Islamic bank in Nigeria was in furtherance of the plot to Islamize the country.
The state branch of the authoritative umbrella of Christian groups in Nigeria further accused the Governor of the Central Bank of Nigeria (CBN), Alhaji Lamido Sanusi of planning to destabilize the country's banking sector through the unwarranted establishment of an Islamic bank.
The CAN located leaders said they would not mince words in expressing their strong misgivings about the action of the CBN governor and vowed to protest the development through all legal avenues possible.
Speaking at a press conference, Thursday evening in Warri, Delta State CAN Chairman, Arch Bishop God-do-well Avwomakpa, disclosed that CAN was planning a protest march to Abuja to register its strong opposition to establishment of the religious bank.
The leaders addressed the press shortly after rising from an executive meeting of the state CAN.
The CBN governor was obviously intent on Islamizing Nigeria by using his privileged office to establish the contentious bank, the Christian leaders said unanimously.
Sanusi has by his action acted outside the laws of the land by disregarding the constitutional provisions that affirm the secularity of Nigeria , the CAN leader claimed.
“It is so disheartening that the removal of competitive and influential banks’ managing directors has culminated in the establishment of Islamic banking in Nigeria .”
“This is a huge surprise to Nigerians who thought that the CBN governor was overhauling the banking system for effective and efficient banking”, he lamented.
Source: ThisDay, 25th June 2011.
Home
|
