By Niran Obele

It is without any doubt that the planned introduction of non interest Islamic banking by the Central Bank of Nigeria has produced much negative emotions.

However, issues like this must be seen through the prism of the law and pure economics. If it is legal, and consequentially will be for the peace, prosperity and good government of Nigeria, emotions should be laid aside.

It is my opinion that the emotions engineered by this issue would be tempered if the legal and economic standings are well examined by both its proponents and antagonists.

The starting point for this examination would be the Constitution of the Federal Republic of Nigeria as amended, and if necessary, the Central Bank Act and the Bank and Other Financial Institutions Act.

Before examining the above enactments, it is necessary to state what non interest Islamic banking is all about. According to the Institute of Islamic Banking and Insurance, “Islamic banking refers to a system of banking or banking activity that is consistent with the principles of the Shari’ah (Islamic rulings) and its practical application through the development of Islamic economics.

The principles which emphasis moral and ethical values in all dealings have wide universal appeal. Shari’ah prohibits the payment or acceptance of interest charges (riba) for the lending and accepting of money, as well as carrying out trade and other activities that provide goods or services considered contrary to its principles.

While these principles were used as the basis for a flourishing economy in earlier times, it is only in the late 20th century that a number of Islamic banks were formed to provide an alternative basis to Muslims although Islamic banking is not restricted to Muslims.”

The Institute further states that “Islamic banking has the same purpose as conventional banking except that it operates in accordance with the rules of Shari’ah, known as Fiqh al-Muamalat (Islamic rules on transactions).

Islamic banking activities must be practiced consistent with the Shari’ah and its practical application through the development of Islamic economics.

Many of these principles upon which Islamic banking is based are commonly accepted all over the world, for centuries rather than decades.” In essence, the principal guidelines for the planned non interest Islamic banking is the Quoran, the Hadith and the consensus of the Islamic scholars.

Despite the foundation of non interest Islamic banking in the Islamic religion, it is necessary to state that it has a lot of economic advantages. According to experts and the contributors on www.answers.com , “Islamic banking and financing is not centered only on credit worthiness and ability to repay the loans and interest; instead the worthiness and profitability of a project are the most important criteria of Islamic financing while the ability to repay the loan is sub-segmented under profitability.

In contrast with conventional banks, Islamic banks do not consider only the credit worthiness and interest rate as standards; instead they must apply Islamic moral/ethical criteria in their provision of financing.

This adds another merit for Islamic banks since there is a beneficial impact on the productivity in the economy as it reduces the social and economic cost of such harmful products and activities.

Another important characteristic which forms the basis for the development of Islamic banks is the relationship with depositors. They deal with their customers on investment grounds rather than a pre-determined fixed interest rate.

They invest the money of their depositors on high profitable projects after going through a strategic analysis in order to give a substantial return to their depositors”.

Furthermore, it appears that the introduction of non interest  Islamic banking would  eliminate the barrier between the haves and the have not by making capital accessible to all based on their business intelligence other than the collaterals they can provide or the people they know.

The most important question after noting the advantages is whether by this economic product, the Central Bank will be breaching its own laws, the BOFIA and the Constitution of Nigeria. Can the CBN be said to be promoting a religion with the planned introduction of non interest Islamic Banking?

Before answering this question, it is necessary to start from the Constitution itself. The Preamble of the Constitution proclaims that Nigeria is “…one indivisible and indissoluble sovereign nation under God…” It is interesting to note that section 318 which is the Constitutional Interpretation Clause did not define “God”.

Which God? The Holy Trinity, Allah, or the numerous African gods and goddesses?  It however appears that reference here is to a monotheist God believed in by Judaism, Christianity and Islam which effectually excludes the indigenous polytheism practitioners.

The Constitution despite recognizing the existence of a Supreme Monotheist God however states in section 10 that “the Government of the Federation or of a State shall not adopt any religion as a State Religion.”

The question is; when could a government entity be said to have adopted a State Religion? This would occur where preference is given to one religion above the others.

In essence, adoption of a State Religion would involve discriminating against other religions. Section 42 of the Constitution provides that “a citizen of Nigeria of a particular community, ethnic group, place of origin, sex, religion or political opinion shall not, by reason only that he is such a person (a) be subjected either expressly by, or in the practical application of, any law in force in Nigeria or any executive or administrative action of government, to disabilities or restrictions to which citizens of Nigerian other communities, ethnic groups, places of origin, sex, religious or political opinions are not made subject to.

(b) be accorded either expressly by, or in the practical application of any law in force in Nigeria or any such executive or administrative action, a privilege or advantage that is not accorded to citizens of Nigeria of other communities, ethnic groups, places of origin, sex, religions or political opinions.”

The implications of section 42 of the Constitution is that no law or government policy must  tilt or be premised on promoting an ethnic group, sex, religion or political opinions with the effect of giving an advantage to such group or making the opposite group to be disadvantaged.

The essence of sections 10 and 42 of the Constitution then is that policies and laws in Nigeria must be religiously, ethnically and ideologically neutral.

The planned introduction of non interest Islamic Banking in Nigeria is not religiously neutral and would violate sections 10 and 42 of the Constitution.

This set back notwithstanding, I am of the opinion that non interest participating banking could be introduced premised on secular principles formulated by Nigerian because non interest banking has a lot of benefit for Nigerians.

Efforts should however be made to ensure that no religion is being promoted, or discriminated against within the intendment of the Constitution.

In conclusion, Nigerians must note that no religious groups have any advantage over the other under the Constitution of Nigeria. All religions and non-religions are equal under the Constitution.

As a secular State, Nigeria must protect its status due to the fact that adherence to the laws would always bring prosperity while lawlessness would always breed chaos.

Promoting a religion through law or government policy would lead to a deep schism. The issue of adoption of non interest Islamic banking should not be sectionalized or personalized but must be looked through the mirror of our Constitution and the laws guiding the Central Bank of Nigeria, Banks and other Financial Institutions. And of course, emotions would die down and reason would reign.

Mr Obele a legal practitioner is of Tayo Oyetibo (SAN) chamber