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 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.”