Barely two months after the Governor of the Central Bank of Nigeria (CBN), Mallam Lamido Sanusi Lamido, announced that he has approved and issued provisional licences to Jaiz International Bank Plc and StanbicIBTC Bank Plc to run an Islamic Bank (Non Interest Bank), more Nigerians are now rising up against the move, saying that introducing a bank with Islamic bent, would not only heighten religious intolerance in the country but, will also not benefit majority of Nigerians.
In a survey conducted by BH across all the major geopolitical zones, 64 per cent of those polled say that Islamic Banking or Non Interest Banking is not the solution to the gnawing poverty and lack of productivity in the northern part of the country, mainly dominated by adherents of the Islamic religion.
Majority of the respondents, say that the CBN should withdraw the provisional licences already issued to the two banks and focus more on strengthening the existing banks by sensitising the unbanked public to move into the formal financial system.
However, 32 per cent of the respondents were of the strong view that the action of the CBN was timely and would benefit a large segment of the lower income group. The remaining eight per cent were neutral.

A remarkable finding through the survey is that responses of most of the respondents reflected their religious belief, a pointer that the issue of Islamic Banking has continued to widen the gulf between Christians and Muslims, and adherents of other religions in the country.
Sanusi, who is a staunch Muslim and a major promoter of Islamic banking in the country, according to a very reliable source in the CBN, “has the backing of some powerful Muslims in the north who are pulling the ropes for him.”
Christians and Nigerians who belong to other religions have cautioned against the plan of the CBN to introduce Islamic Banking culture into the financial services sub-sector, saying that the religious volatility of the country makes it necessary for the apex bank to focus more on strengthening the existing banks and help to promote the unity of the citizens rather than introduce a system that would continue the promotion of hate and religious intolerance in the country.
Islamic banking is particularly and strictly guided by Shariah law. A pointer that a non Muslim Nigerian does not qualify to access facilities from an Islamic bank as he/she is not bound by Shariah Law under the Constitution.
Islamic banks operate principally as interest free financial mediators, but Shariah Law permits the lender to partake in sharing the profit and the loss with the borrower.  Whilst in normal money deposit banks, the lender charges the borrower interest on credit facilities but does not participate in sharing the profit and loss with the borrower.

Before now, Bank PHB Plc, now known as Keystone Bank Limited, was offering Non Interest Banking products. Habib Bank International of Pakistan, a major shareholder of the bank had introduced the product to boost the Islamic religion.
But a top management staff of the Bank told BH in confidence that one of the greatest challenges they had was in managing and marketing the Non Interest Banking products.
“I do not think that the Non Interest Bank will work even now. One of the reasons is that top Nigerians that matter in the economy will not bring their fund into the bank because they will get virtually nothing from it. In most cases, the Islamic Bank product is a hard sell in the Nigerian economy. To me, it will die a natural death as the product died a natural death in our bank. It never performed at all,” the bank staff said.
On the itch to introduce Islamic banking, CBN's Deputy Governor, Financial System Stability, Dr. Kingsley Moghalue disclosed that the apex bank's  action was borne out of the desire to provide wider opportunity for the millions of unbanked Nigerians and woo them into the formal financial system. But he could not clarify with any data whether those outside the formal financial system were as a result of religion or whether Islamic banking is the major solution to sensitise the unbanked in the country.
“I will like to very clearly assure Nigerians that non-interest banking is part of our plan to increase the inclusion into the financial sector people who have stayed out of the financial system for various reasons. There is no agenda, it is simply finance and not about religion. I want to further assure Nigerians very clearly that non-interest banking is open to people of all faiths and all types of non-interest bank applications are welcome at the CBN,” stated the apex bank's top-notch.
A look at the version of the bank model planned by the CBN governor, especially looking at the Banks and Other Financial Institutions Act (BOFIA) reveal that the Sanusi's version of the Non Interest Banking is a violating of Section 10 of the 1999 Constitution and the Banks and Other Financial Institutions Act  (BOFIA) 1991 (as amended).
Section 39 (1) of the BOFIA stipulates that “,  (a) no bank shall, as from the commencement of this Decree, be registered or incorporated with a name, which includes the words “Central” “Federal,” “Federation,” “National”, “Nigeria”, “Reserve”, “State”, Christian”, “Islamic”, “Moslem”, “Quaranic”, “Biblical”.  While Section 10 of the 1999 Constitution states, inter alia, that “no particular religion shall be adopted in whatever form, as state religion.

CBN Alters BOFIA Guideline

Although BOFIA approves Non Interest Banking (NIB), but in a predictable twist, the CBN Governor approved in January, that the NIB clause be altered and be tinted with Islamic religious colouration.
In the reworked guideline, the CBN stated that only “Shariah compliant” persons would be eligible to run and have access to NIB facility. With this clause, according to industry operators, non adherents of the Islamic faith are completely shut out from benefiting from the NIB financial window,  a situation described by legal experts, analysts and bankers as “religious discrimination in the business place. ” “This does not tally with the Constitutional requirement on equality”, a lawyer who prefers anonymity told BH.

Investigations by BH revealed that the widespread angst against Islamic banking within various groups in the country is mainly due to the perceived fundamentalism of the CBN leadership. A source in the CBN told BH that “Sanusi has a hidden agenda.” He has said that it was Soludo who introduced Islamic banking, but he cleverly didn't tell the world which variant of it Soludo introduced. A careful examination of Sanusi's model will reveal a striking difference with the Soludo model. Whereas Soludo's was basically Non-Interest Banking (NIB), Sanusi's prescription is a blatant religious product whose original form excluded non-adherents of the Islamic faith.”
A review of both models revealed that Soludo's NIB model was completely stripped of any religiosity but the model now being promoted by Sanusi is basically clothed in and with the Islamic religion, making it a parallel banking structure with the formal banking that has existed in the country for almost two centuries.
BH learnt authoritatively that the legal framework was constructed by external legal consultants without any input by the legal department of the CBN. A source in the legal department told BH that a memo on the Islamic bank was sent to them asking for their comments, but with a proviso that a decision had already been taken on the issue and that their input was merely required for record purposes.
BH could not confirm this with CBN's official spokes persons. Other sources in the CBN told BH that the Governor is obviously working with external persons to promote Islamic banking. According to the source, Sanusi is of the view that the recapitalisation of banks under Soludo favoured southerners most, and to bring the northerners into the financial system, since the formal banking sub-sector is too entrenched for the northerners to make a remarkable mark, it would be better to introduce Islamic banking, fund it with public resources and allow it to compete with conventional banks.

CBN's (Reworked) Non Interest Banking Framework
DEFINITION OF NIFI: “A Non-Interest Financial Institution (NIFI) means a bank or Other Financial
Institution (OFI) under the purview of the Central Bank of Nigeria (CBN), which transacts banking business, engages in trading, investment and commercial activities as well as the provision of financial products and services in accordance with Shariah principles and rules of Islamic commercial jurisprudence.”
The Glossary of Terms of the CBN's NIFI Framework states that:
Shariah Principles refer to “the divine guidance as given by the Holy Qur'an and the Sunnah of the Holy Prophet and embodies all aspects of the Islamic faith, including beliefs and practices”.

NON-PERMISSIBLE TRANSACTIONS:
Interest;
Uncertainty or ambiguity relating to the subject matter, terms or conditions;
Gambling;
Speculation;
Unjust enrichment;
Exploitation/unfair trade practices;
Dealings in pork, alcohol, arms & ammunition, Indecency and;
Other transactions, products, goods or services, which are not compliant with Shariah rules and principles.

LICENSING PRE-CONDITIONS:
Evidence of a technical agreement executed by the promoters of the NIFI with an “established and reputable non-interest bank or financial institution”. This, in practical terms, implies compulsory partnership with an existing Islamic bank.
NIFI's Memorandum and Articles of Association (MEMART) to state that its business operations will be conducted in accordance with Shariah principles and practices.

ELIGIBLE TRANSACTIONS:
Murabahah: Sale of an asset by the financial institution to a customer at cost plus a profit margin.
Mudarabah: A profit sharing contract where one party contributes his entrepreneurial efforts, while the other provides capital.
Musharakah: A partnership contract between two or more parties, each contributing capital.
Ijarah: Lease transaction.
Salam: Forward sale contract.
Istisna: Manufacture/construction order contract for manufacture of goods and commodities allowing cash payment in advance and future delivery according to specifications given in the contract agreement.
Wadia: An amount deposited whereby the depositor is guaranteed his/her fund in full.
Wakalah: Agency agreement assigning management of funds to a manager for fees.
Sukuk: Certificates of equal value representing undivided share in ownership of tangible assets.
Any other financing mode or structure that is Shariah-compliant and approved by the CBN.

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