Sanusi Tasks Islamic Banks to Impact Financial System

By James Emejo

Governor, Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi yesterday challenged the Islamic financial institutions to take advantage of the favourable regulatory environment to make an impact in the industry by introducing competitive and innovative products which with the principles of Sharia law.
He spoke at the opening of the National Conference on Islamic Banking and Finance in Nigeria, which was organised by Shaikh Nsir Kabara Research Centre in Abuja.

Sanusi Tasks Islamic Banks to Impact Financial System

Sanusi Tasks Islamic Banks to Impact Financial System

Sanusi however noted that Islamic finance had shown its potential in achieving financial inclusion in many economies by bringing large numbers of hitherto unbanked and under-banked populations especially Muslims to the organised financial sector.

His charge came on a day the Chairman, Board of Directors of Jaiz Bank Plc, Alhaji Umaru Mutallab, also called on the regulatory authorities in the banking sector to urgently develop “Sharia-compliant liquidity management instruments” in which non-interest Islamic banks can invest in.

However, Sanusi said Sanusi said in view of the potential which Islamic banking offer, the CBN in conjunction with other sister institutions had assembled a technical team to explore the prospects of alternative modes of finance and set out the procedures for using the modes in the development of infrastructure.

He said: “In the face of the growing inter-connectedness of the global financial system and it’s integration, Islamic financial markets have established their presence in all the major global financial centres, and constitutes an integral part of the global financial landscape, playing a key role in deepening financial markets with products and instruments accessed across board. It is thus unrealistic for any existing or aspiring financial centre to be oblivious of this development.

“The efficacy of the Islamic finance in attracting liquidity to national economies especially through the Sukuk instruments structured for infrastructure development has also shown the contribution that Islamic finance can give to developing economies in building their much needed infrastructure”.

Meanwhile, Mutallab also commended the CBN, Nigeria Deposit Insurance Corporation (NDIC), Debt Management Office (DMO) and Securities and Exchange Commission (SEC) for setting up the required regulatory framework for the establishment of non-interest Islamic banking in the country, adding that there was more to be done especially in the area of Sharia-compliant liquidity management instruments.

He expressed satisfaction that the controversy, which trailed the introduction of non-interest Islamic banking and finance in the country had been rested as people of all faiths were beginning to understand and embrace this alternative mode of banking.

Mutallab said: “We at Jaiz Bank are proud to have pioneered the setting up of the first full-fledged non-interest bank in the country. I am confident that as we continue to expand and create the much needed knowledge and awareness of Islamic finance, people will begin to understand and accept it. This is important because globally, the market for Islamic banking is growing rapidly and this robust growth is expected to continue into the foreseeable future.
“In many parts of world, Islamic banking has evolved from being just a niche offering into being part of the mainstream financial service landscape. I strongly believe that this trend will replicate itself here in Nigeria and other parts of Africa.”

Naira Gains N1.45 as Treasury Bills Yield Declines

Naira Gains N1.45 as Treasury Bills Yield Declines

The naira gained a total of N1.45 against the dollar at the interbank market, last week as it rose to N158.85 to a dollar on Friday, compared with the N160.30 to a dollar it stood last Tuesday.

Dealers attributed the trend to a drop in the demand for the greenback by oil marketers continue to wane. The local currency attained its strongest level at the interbank since two months.

This occurred, just as treasury bills yields offered by the Central Bank of Nigeria (CBN) declined at the auction held last weekend as demand was far higher than the N149.3 billion sold.

In fact, total bid at the treasury bills auction increased by N167.55 billion to N316.85 billion, the highest amount since the November 24 sale.

Bloomberg revealed that the apex bank sold N32.1 billion of 91-day bills at a yield of 14.70 per cent, 9 basis points lower than the 14.79 per cent at the last auction held on January 25. Similarly, the apex bank sold N50billion of 182-day securities at 16.09 per cent, 1 basis point lower than the previous sale as well as N67.2 billion of 364-day notes at 16.89 per cent, 0.3 per cent lower than at the last sale on January 11.

“The consumer inflation rate fell for the first time in four months to 10.3 per cent in December, from 10.5 per cent a month earlier, the National Bureau of Statistics said January 18. With the central bank committed to containing inflation, it appears investors will continue to enjoy attractive returns from purchases of treasury bills,” Chief Economist at FBN Capital Limited, London, said.

The apex bank maintained its benchmark interest rate at a record high on of 12 per cent on January 31 to curb inflation after the government partially removed fuel subsidies, boosting gasoline costs.

However, at the CBN’s regulated Wholesale Dutch Auction System (WDAS) last Wednesday, the naira also climbed by 35 kobo to close at N156.50 to a dollar, stronger that the N156.85 to a dollar it closed last week Wednesday.

The CBN offered a total of $450 million to dealers, compared with the $250 million sold last Wednesday. The apex bank increased its supply at the WDAS to meet the volume of demand because the auction was not held on Monday. The bi-weekly auction did not hold last Monday because of the Muslim public holiday.

Unemployment Rate

CBN Governor, Mallam Sanusi Lamido Sanusi, last week disclosed that while the Nigerian economy grew at the rate of seven per cent for the past five years, unemployment had actually doubled at same period.

Sanusi had also said the current security upheaval and internal insurrection all over the country were as a result of severe poverty and rising unemployment, especially in the north.

The CBN governor had noted that the present development and economic reality in Nigeria, where unemployment was widening at a time of economic growth, was an aberration.

He had said: “According to data from the National Bureau of Statistics (NBS); unemployment rate in 2011 is 29.3 per cent. This means that unemployment has doubled since last five years. Unemployment in Yobe is 60.6 per cent, Kano is 67 per cent and that is why when you go to Kano you will see a sea of people without work. We must make sure we did not begin to see our demography as a curse.”

Sanusi had also said that government needed to rethink and restructure the economic system of the country by creating the enabling environment that encourages industrialisation. He had added that jobs would only be created by establishing industries that rely on little technology but high in productivity similar to the ones adopted by the Chinese and Asian Tigers.

Islamic Development Bank

Minister of State for Finance, Alhaji Yerima Ngama, last week, said that discussions had reached advanced stage between the federal government and the Islamic Development Bank (IDB) to secure a $600 million-loan for infrastructure development in the country.

He had said  the loan which would be on a three to four-year borrowing plan without interest had already passed the screening stages and would soon be made available for federal and state government projects.

The minister had also said there were some criteria yet to be satisfied by government before it could get the funding. For instance, he pointed out that some of the projects, which funding was being sought for had not actually commenced.

But Islamic financing principle would prefer mostly projects which are on-going and have been evaluated to ascertain minimal risks. Ngama had stressed that there was   need to apply for funds ahead of time.

Executive Director, Islamic Development Bank (IDB), Gambo Shuaibu, had said IDB’s authorised capital had just been increased to about $30 billion with Nigeria investing about 7.8 per cent of the amount over a period of 10 years.

He said the forthcoming forum had become necessary given the country’s level of investment in the multi-lateral development finance institution.

Jaiz Bank

THISDAY last week reported that after months of controversy generated by the introduction of the non-interest banking in the country, also known as Islamic banking, Jaiz Bank Plc quietly opened its doors for business on Friday, January 6, 2011 in Abuja.

According to THISDAY, the bank, which has its head office in Kano House, Central Business District, Abuja, had been offering banking services for about a month, same for its branches in Kaduna and Kano which were also opened simultaneously.

Jaiz’s eventual emergence followed repeated failures in the past to begin operations more than five years after it launched itself into the public consciousness to raise funds from the capital market.

The bank, which has as one of its promoters a former chairman of First Bank of Nigeria Plc, Alhaji Umaru Mutallab, was actually incorporated on April 1, 2003 as a public limited liability company with an authorised share capital of N2.5 billion.

The CBN had announced on June 20, 2011 that it had issued Jaiz Bank an approval-in-principle to operate as an Islamic bank – the first financial institution to be so licensed. It was thereafter, given six months to comply with the apex bank’s capitalisation requirement, among other criteria, in order to receive the final licence.

Financial Reporting Council

The Financial Reporting Council of Nigeria (FRC) said it had sought the co-operation of the CBN in ensuring effective enforcement of financial reporting guidelines in the country.

The FRC had said the move would also address the challenges associated with implementation of International Financial Reporting Standards (IFRS). The Executive Secretary, FRC, Mr Jim Obazee, explained that the collaboration would address issues concerning the implementation of IFRS.

Obazee particularly mentioned embedded insurance contract in banking products, fully provisioned loans reclassified to memorandum account, CBN policy in respect of 55 per cent restriction on revaluation surplus of property, plant and equipment versus International Accounting Standards 16 property, plant and equipment.

In his response, Sanusi had also called for a collaborative effort by financial regulators in the implementation of IFRS. Sanusi agreed that the FRC should be participating in the activities of the Financial Services Regulation Coordinating Committee (FSRCC), even as the statement quoted the CBN Governor to have expressed surprise that the Council was not a regular member of the body. He had also charged the FRC to be prepared for the bureaucratic bottlenecks that may be encountered in registration of professionals.

Cassava Production

The Federal Ministry of Agriculture and Rural Development last week said disclosed plans to partner Thai Tapioca Development Institute of Thailand (TTDI) in cassava production and marketing.

Acknowledging the challenges facing the nation’s farmers in getting market for their cassava, Minister for Agriculture and Rural Development, Dr. Akinwumi Adesina, had said the ministry, under the Transformation Agenda, was poised to ensure that necessary steps are taken for Nigerian farmers to have access to improved variety of cassava as well as create market, since an increase demand for cassava would stabilise price for farmers.

Adesina had stressed that Nigeria had zero per cent in the Global Value of cassava, while the country remained number one in its production.

He had argued that Nigeria had a lot to learn from Thailand who is number three in cassava production yet the largest exporter of the crop in the world.

The minister had also explained that the partnership between Nigeria and Thailand would bring about optimum utilisation of cassava that Nigeria has in abundance.

Power Projects Minister of National Planning, Mr. Shamsuddeen Usman, last week said that the federal government was in talks with the European Investment Bank to secure funding for the Calabar-Kano gas pipeline and the Mambilla power projects under the ministries of Petroleum Resources and Power, respectively.

THISDAY reported that the Africa-EU Union Trust Fund exists to, among other things, fund various projects that support economic growth. Specifically, the Mambilla power project, which consists of three dams, is estimated to cost US$3.2 billion and had been in the pipeline since 2005 when the feasibility study was reviewed.

And the Calabar- Kano gas pipe line project or the Trans-Nigeria Gas Pipeline is the domestic segment of the proposed Trans-stream gas pipeline for gas supply from Nigeria to Europe, meant to diversify export routes for marketing Nigeria’s natural gas and strengthen regional cooperation.

Usman had said the two projects would add value to Nigeria as well as make life easy for Nigerians through the enhancement of economic opportunities for the country.

External Reserves

Nigeria’s external reserves, which have been bullish since this year, due to the upswing in oil prices in the international market had improved significantly by a total of $1.803 billion in the last five weeks.

THISDAY had reported that showed that the growth recorded by the forex reserves, represented an increase by 5.5 per cent, from $32.915 billion as at December 30, 2011, compared with its current position of $34.718 billion as at February 2.

THISDAY findings had further shown that the last time the reserves stood around its current value was on September 15, last year, when it rose to $34.86 billion.

Thereafter, it had hovered around the region of $32 billion and $33 billion. It however closed last year at a low level of $32.9 billion, which was 0.6 per cent less than the $33.1 billion it attained in the corresponding period of 2010.

Experts had attributed the build-up in the forex reserves to the upbeat recorded by oil prices in the international market since this year as well as the moderate demand for forex at the CBN’s official forex market –the WDAS.

Islamic Bank, Jaiz, Opens Doors to the Public

After months of controversy generated by the introduction of the non-interest banking in the country, also known as Islamic banking, Jaiz Bank Plc quietly opened its doors for business on Friday, January 6, 2011 in Abuja, the Federal Capital Territory (FCT).

The bank, which has its head office in Kano House, Central Business District, Abuja, has been offering banking services for about a month, ditto its branches in Kaduna and Kano which were also opened simultaneously.

The commencement of interest-free banking business has obviously ended months of speculation and suspense associated with the birth of a new form of banking in the country. Indeed, the controversy surrounding interest-free banking may have caused Jaiz Bank to open without the usual pomp and ceremony associated with conventional banking marketing gimmicks, to herald commencement of business.

Jaiz’s eventual emergence follows repeated failures in the past to begin operations more than five years after it launched itself into the public consciousness to raise funds from the capital market. The bank, which has as one of its promoters a former chairman of First Bank of Nigeria Plc, Alhaji Umaru Mutallab, was actually incorporated on April 1, 2003 as a public limited liability company with an authorised share capital of N2.5 billion.

The Central Bank of Nigeria (CBN) eventually announced on June 20, 2011 that it had issued Jaiz Bank an approval-in-principle to operate as an Islamic bank – the first financial institution to be so licensed. It was thereafter, given six months to comply with the apex bank’s capitalisation requirement, among other criteria, in order to receive the final licence.

But much furore arose from the introduction of Islamic banking last year when the CBN Governor, Sanusi Lamido Sanusi, lent his support to the project, arguing that it was no different from conventional banking, with the non-interest banking service as a product niche. Controversy, however, was stirred when he said banks that offer such products would have to adhere to the tenets of Islamic commercial jurisprudence and must have a Sharia Advisory Committee

THISDAY, however, learnt that Jaiz Bank may have hastily commenced business under pressure and may not have been fully prepared to market its presence in the Nigerian economy. This, it was gathered, has impacted on the bank, resulting in the low patronage in its Abuja banking hall which was unusually quiet when THISDAY visited Wednesday.

When this newspaper visited the bank’s head office which also houses its Abuja branch, there were only two banking product offerings: the corporate account and individual current account while other offerings such as internet banking and saving accounts, among others were said to be on hold for now.

Sources at the bank said it intends to also operate the children’s account, fixed deposit account as well as offer a range of services including internet banking and ATMs among others.

The CBN’s decision to introduce Islamic banking in the country had been greeted with criticisms from members of the public, especially Christian leaders who suspect that it was a ploy to Islamise the country.

Amidst the heated debate, some persons had suggested that the word “Islamic” be replaced with a more receptive phrase such as “non-interest” banking in order to douse the anxiety of those who were uncomfortable with it.

THISDAY checks further revealed the CBN has also encouraged the amendment in the nomenclature for Islamic banking by using the phrase, “non-interest banking” more often. But a marketer with the bank, who would not want to be named said: “Whether you call it non-interest or Islamic banking, the fact still remains that the principles cannot be changed because our model is firmly rooted in Islamic principles.”

But there are yet other hurdles to cross for Jaiz and other non-interest banks to follow suit. The source added that Jaiz is at the moment running skeletal services because it still needs to get some approvals from the CBN before it can proceed full steam ahead.

The source further explained that a good number of Nigerians were yet to fully comprehend the basic principles of the institution, adding that some still see the bank as strictly an Islamic affair.

According to him, the bank would not be interested in investing in start up businesses and would also shun “unethical” ventures such as prostitution, beer-selling business, gambling, and cigarette manufacturers, among others.

Although Managing Director/Chief Executive Officer of the bank, Alhaji Mustapha Bintube, could not be reached for comments, the source said the bank’s operations would be consistent with the principles of Islamic law (Sharia) and its practical application through the development of Islamic economics which prohibits fixed or floating payment or acceptance of specific interest (usury) or fees for loans.

The source also admitted that further public enlightenment would be needed to create awareness so Nigerians could take advantage of interest-free services to actualise their target economic objectives.

But whether Jaiz has fully started commercial services or not, by opening its doors, a definitive statement has been made: Islamic or non-interest banking has become a reality in Nigeria and has come to stay.

Islamic Banking – Christian groups may apply for own licence

HAVING failed so far to convince the Central Bank of Nigeria (CBN) to withdraw its current guidelines on Islamic Banking, there are indications that some Christian groups may have decided to use a new approach to challenge the apex bank on the issue.


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Investigations by The Moment revealed that instead of continuing to protest against what they perceive to be the CBN’s attempt to use the guidelines to promote Islam over other religions, the Christian groups are now planning to apply to the apex bank for a non-interest banking licence that would allow them set up a bank that would operate in accordance with Christian principles. Continue reading

Ignorance, Islamic banking, and Sanusi's NASS presentation

When one compares the meeting of the House of Representatives with the Central Bank of Nigeria (CBN) Governor on Islamic banking and N150,000 cash withdrawal limit introduced by the CBN and the United Kingdom’s Commons media committee hearing on the phone hacking scandal of Rupert Murdoch’s News of the World Corp, one easily understands that ignorance is a major factor responsible for the weakness of our democracy which continues to live in the nascent abyss.

At the said meeting, the law makers openly confessed their low level of awareness on both issues, particularly the cash withdrawal limit showing that very little research had been done ahead of the meeting.

Continue reading

ICRC boss seeks Islamic finance guideline for N32tr infrastructure

Following the successful use of Islamic finance to fund infrastructure globally, Director General of the Infrastructure Concession Regulatory Commission, Mansur Ahmed, is seeking a regulatory framework to help bridge Nigeria’s N32 trillion infrastructure deficits.

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Approval by the Central Bank of Nigeria (CBN) for the operation of the first Islamic bank in Nigeria, has been trailed by vehement opposition to the banking policy, which President of the Christian Association of Nigeria (CAN), Ayo Oristajafor, believes, is an attempt to Islamize the country in contravention of the constitution.  Continue reading

Nigeria on track to be Africa’s Islamic finance hub

Islamic scholar and Central Bank of Nigeria Governor Mallam Sanusi Lamido Sanusi hopes to achieve his dream by 2020

It’s been one year since Mallam Sanusi Lamido Sanusi, a career banker and an Islamic scholar, was appointed governor of the Central Bank of Nigeria (CBN).

In that year, as Governor of Central Bank of Nigeria, he has witnessed unprecedented changes.

Islamic scholar Mallam Sanusi Lamido Sanusi is known in the banking industry for his contribution towards developing a risk management culture in the Nigerian banking sector.

Sanusi attended Ahmadu Bello University (ABU), Zaria, Nigeria where he obtained a Bachelor of Science degree in Economics in 1981. Sanusi also holds a first class degree in Sharia and Islamic Studies from the African International University in Khartoum, Sudan.

He began his working career in 1983 as an academic at ABU Zaria where he taught economics. Continue reading