Islamic banking in the United States

Now a flash back: Once upon a time in this land, there was this bank fancifully named Bank of the North. To be honest, I do not know nor have I researched the philosophy behind its establishment. All I can glean looking at existing or previous patterns in this land is that, it may have been founded to check-mate the burgeoning economic tentacles of another bank, named African Continental Bank (ACB) or of that other one known as Wema.

It was the days of healthy regional economic rivalry amongst the regions that made up Nigeria. ACB was for the east while Wema was and is still for the west. I do not know if present day Unity Bank replaced Bank of the North.


I know that Unity bank was the product of a tryst involving many fledgling banks of similar socio-political-cum economic hue – banks which could on their own, not meet the stringent recapitalization requirements of the banking reform days. I also know that the Bank of the North (BON) was for the north. BON had a beautiful logo ornamented with cowries and cereal, and some hard to decipher Arabic scribbling.

I have researched to confirm that it practiced a form of Islamic banking. At its apogee and great heights, Bank of the North ruled the financial landscape of northern Nigeria and beyond. And like everything that symbolized northern Nigeria or Hausa/Fulani/Islamic hegemony over the rest of the land, it used to be headquartered in Kaduna. It was from Kaduna, that it stretched its operational tentacles even into Onitsha and Port Harcourt where, as was foretold by its founders, it met the Niger at the Atlantic Ocean.

And that it was heavily patronized by the government of the north and most notable government and quasi government (state and federal) institutions including universities located in the north. At its peak, it gave out loans and financial assistance to those institutions and persons that patronized it. It charged interests, appropriately and handsomely with or without Islamic considerations. It was the bank that superintended over the rise and rise of groundnut pyramids over the rolling agricultural landscape of the entire northern Nigeria. Since, BON’s dominant sphere of operational influence was the north, let’s reason that most of its individual customers, were, Hausa/Fulani and of the Islamic religious bent. Let’s also reason that most of the customers, who obtained loans from the bank, were Muslims who did not protest any form of usury. And that the people prospered. That was then. This is now.
In the Present: One of the “strongest points” made and propagated by the supporters of Islamic banking in Nigeria is the fact that some Christian countries such as France, the United Kingdom and the United States also operate that form of banking. Naturally, anybody reading such a story, including the gullible would immediately be persuaded to scream: “Wow, Islamic banking even in the US and the UK?”

In their minds, they will even stretch the argument to say, “If so, what is the big deal having such an institution here?” They have fancied that the US and UK are some of the finest examples of the practice of free market economy. They will be compelled to further reason that the US and the UK went to war in the Gulf ostensibly to stop Al-Qaida and the Islamic fundamentalists. And that if the US and the UK appear to be checkmating the spread of Islamic extremists and at the same time tolerating the operation of Islamic banking or its semblance in their countries, why would the setting up of a similar banking institution in Nigeria bother Nigerians?

To be sure of what I was about to put on paper regarding Islamic banking as it operates in the US and UK, I googled Sharia banking, Islamic banking and non-interest banking. I came up with a myriad of interesting revelations that should help lay to rest, the misinformation-minded ingenuity of supporters of the concept of Islamic banking in Nigeria.

I found out that yes, there are banking and commercial institutions around the world including the New York Stock Exchange, which operate a form of non-interest banking or those that co-opt some form of Islamic banking. But, the big BUT is that these are equally notable institutions which on a daily basis do not take direct restricted dictations from their host nation’s central banks or their equivalents. Such banks as Bank of America, Barclays PLC; BNP Paribas Group; Citibank, N.A; Credit Agricole; S.A. Deutsche Bank AG; Dow Jones & Company Inc; Equity Insurance Group Limited, Goldman Sachs Group, to mention just a few have departments that cater for the interest of Sharia.

The aforementioned institutions operate essentially in a real free market economy. They have little or no visible specific interference from government regulatory institutions as our CBN would want to do here. These are virtually private financial institutions that co-opted some forms of Islamic banking and non-interest segments of it, for sake of business.

These are institutions that have their eyes set on the huge, soft oil monies of the Middle East. Moreover, these advanced economies they site have solid monitoring institutions that have endured several decades of pressure and often times have defined and strictly adhered to checks and balances that insulate abuse. Abuses such as using the Sharia segments of their institutions to fund terrorist activities! In those countries sited, elaborate frame works have always been in place to enable Islamic banking or a variant of it to prosper. Such economies do not operate the type of unregulated bureau de change as we do here.

Okay, assuming Islamic banking is also operated in the United States; does Nigeria as of now have all the social structures, modalities and or enforceable laws in our statute book that would prevent abuse as is done in the United States? Would important personalities who abuse the system ever be prosecuted? In the US they parroted about, a high ranking member of the legislature and leader of the Democratic Party named Dan Rostenkowski was sent to jail because he pilfered House postage stamps. If Dan Rostenkowski were to be a Nigerian and the head of operations of a bank, would he have been sent to jail?

Would he have been prosecuted in the first place? In the same UK they parroted, some members of the legislature recently were arraigned in the court for upping their rent subsidies without proper authorization. When the news broke, some of those fingered in the scandal resigned in ignoble shame barred by conscience, opprobrium and public rejection never, ever to contest for any public office in their lives.

Will such happen here?
If the need to introduce Islamic banking is, because of the need to operate non-interest banking, why can’t the proponents achieve that ambition by mandating existing banks nationwide to create departments for that purpose as is done in the United States and elsewhere? Why found a new line of banking institution and name it non-interest or Islamic banking if not for ulterior motives and the unnecessary stirring of the hornet nest? Why can’t the authorities let sleeping dog lie?

Why can’t our leaders be culturally and religiously sensitive when they enunciate policies that appear visibly divisive? Why of all times, in the history of Nigeria should the introduction of Islamic banking turn out to be of national priority? Why the threat by Alhaji Datti that there will be a war in the land if Islamic banking is not introduced by the CBN. Why would the Sultan lend a supporting voice?


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