31/01/2011

The banking sector in Nigeria, Africa’s most populous country, has hardly had time to digest the "Guidelines on Shariah Governance for Non-interest Financial Institutions in Nigeria" and the "Framework for the Regulation and Supervision of Institutions Offering Non-interest Financial Services in Nigeria" published by the Central Bank of Nigeria (CBN) on Dec. 31, 2010 and Jan. 12 2011. The regulator has already been forced to defend its action of introducing Islamic banking into the country.

The objective of the framework, according to the Nigerian banking regulator, is to provide minimum standards for the operation of institutions offering non-interest banking and financial services in Nigeria.

It is no secret that Nigeria is highly sensitive to sectarian politics. Recent rumors, no doubt spread by people with certain political agendas, have alleged that the new Governor of the CBN Mallam Sanusi Lamido Sanusi has introduced Islamic or interest-free banking in the country as part of a “northern agenda”. This refers to the north of the country, which is predominantly Muslim and as such to an alleged Muslim agenda for the country.

This may be pure political mischief making because the same people are also spreading rumors that the CBN is trying to privatize five of the local banks or allowing them to sell off shares to foreign investors, as if there is a God-given law that local banks must only be owned by Nigerians. There have been further rumors that the CBN has also bailed out the above banks to "fatten" them for foreign investment. The CBN stressed that the injection of 420 billion naira into the five affected banks was neither an equity injection nor a bailout but “a normal central banking function of lender of last resort to the banks.”

“On the allegation that the governor is introducing Islamic banking as part of the alleged Northern Agenda,” explained the CBN in a statement, “the fact is that Islamic banking/non-interest banking (or whatever it is called) has already been approved by the CBN during the tenure of Professor Chukwuma C. Soludo (a Christian southerner). In fact, provisions of the Banks and Other Financial Institutions Act (BOFIA) 1991 as amended, Sections 9, 23 and 52, provided for the establishment of Islamic banking in Nigeria. Consequent upon this, the former Habib Bank was given an approval in 1992 to operate a window of Islamic banking which is still operational with Bank PHB. The approval by the CBN under Soludo saw the emergence of the proposed JA’IZ Bank which has been working to raise 25 billion naira capital base as required (under BOFIA). It is obvious therefore that Islamic banking was already in Nigeria years before Sanusi Lamido Sanusi became the governor of the Central Bank of Nigeria.”

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Mushtak Parker - Arab News