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Islamic banking: Before the legal actions begin

By Babajide Komolafe

It would have been a big surprise if the introduction of Islamic banking had not generated the kind of response witnessed in the last one month. This is because in Nigeria, religion evokes strong passion and reactions.

Expectedly, there has been stiff opposition to the introduction of Islamic banking, mostly from Christian groups, who believe that it is part of a grand design to Islamise Nigeria.

There are others who oppose it because they believe it violates the secularity of the Nigerian state as enshrined in the constitution and that the CBN does not have the powers to introduce that type of banking.

All the explanation and defense by the Central Bank of Nigeria (CBN),that its action is driven by need to include more people into the financial system, have not convinced the opposition, maybe because the current governor, Mallam Lamido Sanusi is a Muslim coupled with his combative approach to the matter.

Although those opposed to Islamic banking are yet to indicate intention to legally challenge its introduction, the CBN governor has advised them to go to court.

Should this happen, a logjam would not only ensue, such move would undermine the harmony and respect between the two main religions in the country.

To avoid this, both camps need to be objective about the reality of Islamic banking and find a common ground that would ensure a win-win result.

First, the CBN needs to be sensitive and objective about the concern expressed by the opposition, especially the Christian groups – that Islamic banking might be part of a grand plan to Islamise Nigeria.

The Christians have a right to express this concern, just like Muslims would have done if it was Christian banking or something else that is being introduced.

And the Muslim groups too, who are the ones that would enjoy the benefits of Islamic banking need to be objective about this fact. To dismiss those opposed to it as “uninformed” or “religious intolerants”, is insensitive and like adding petrol to fire.

It won’t solve any problem. Both the apex bank and protagonists of Islamic banking need to engage the opposing group and convince them that Islamic banking is not an attempt to Islamise the country.

Secondly, the antagonists particularly, the Christian groups, need to be objective and strategic in their opposition of Islamic banking.

One would have expected that before opposing Islamic banking, they would have done extensive research on it, and come up with facts that support their claim that it is an attempt to Islamise Nigeria.

So for this group, while they have a right to be concerned or worried, they should research on what Islamic banking is all about and find out if indeed it has been or can be used to Islamise a country.

They need to find out if indeed, beyond the opportunities and benefits of financial inclusion, there is really anything to fear about Islamic banking.

One of the interesting things about Islamic banking, which the Christian groups also need to note, is that the core philosophy behind Islamic banking, which is non-interest lending – is indeed a biblical commandment in the Old Testament. “If you lend money to any of my people who are in need, do not charge interest as a money lender would,” says the Bible in Exodus 22:25.

In addition to this is the prohibition of lending money to produce goods and services considered immoral and unethical e.g. alcohol, pork, gambling, which also resonates with the Christian faith.

The above implies that the core of principles of Islamic banking are not exclusive, it was just a matter of which of the two faiths developed it into a formal banking business.

Further investigation would also reveal that a lot of countries and organisations that are not Islamic have introduced Islamic banking simply because of the need to reach out to the millions of Muslims around the world with banking services unique to their faith.

Also, its non-interest, profit- sharing practice offers succour to people and businesses who cannot meet the stringent criteria for loan under the conventional, interest-based banking.

That is why a number of banks in Nigeria have applied to the CBN for licence to offer Islamic banking. One of these banks is Stanbic IBTC that was granted Islamic banking licence last week.

Explaining the rationale for the bank’s application for Islamic banking licence, Moodley, Chief Executive, Personal and Business Banking Africa, Standard Bank Africa, the parent bank of Stanbic IBTC recently told a group of African journalists in Johannesburg that the application is driven by the bank’s goal to reach every African with banking services.

He said the bank realised that there are some people -Muslims- who do not want to be part of conventional banking because of their faith, hence decided to offer Islamic banking so as to reach and include them in its customer base.

That is the thinking driving Islamic banking and that is why there are more than 300 institutions in 51 countries including Britain and USA, offering Islamic banking services in one way or the other. To these institutions, Islamic banking is just another form of banking.

Though a cursory investigation of this phenomenon might reveal that it is thriving due to the benefits and opportunities to serve more people with banking services, those who fear it might be used to Islamise Nigeria should help the country by investigating what obtains in other countries like USA and what is being introduced in Nigeria so as to detect anything unusual that might have been included for such or any other purpose apart from the purpose of financial inclusion.


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.