Central Bank of Nigeria (CBN) Governor, Lamido Sanusi, has said that the prevailing economic meltdown has increased the demand for Islamic financial products and services across the world, because according to him in spite of the crunch, Islamic institutions have displayed "strong resilience reflecting their conservative approach to business, balanced and ordered appetite for growth and focus on the basis of financial intermediation as opposed to innovation."

Sanusi said that the CBN will soon introduce Islamic banking in Nigeria to help stabilise the sector as a fallout from the problems it is experiencing.

He said it is in recognition of the benefits of Islamic banking that the CBN initiated actions to develop a regulatory and supervisory framework for Islamic (noninterest) banking in Nigeria, saying this is to create the enabling environment for attracting multibillion dollar global Islamic finance industry to Nigeria and to enable Nigerians benefit from Sharia compliant banking services and products.

Meanwhile, a week after his return from a road show to London, Sanusi is set to fly again. This time, he is billed to visit China for another missionary journey that would see him explain the ongoing regulatory reforms to correspondent banks from Asia. The choice of China is hinged on the fact that some Nigerian banks have relationship with Chinese banks, just as two, including Oceanic Bank, one of those whose executive management teams were sacked by the CBN for recklessness, recently opened a subsidiary in that country.

According to Sanusi, studies have shown that due to the Islamic banking nature, which is asset linked as compared to the interest-based system which is subject to fluctuations in interest rate levels, an interest-free monetary system is more likely to lead to monetary stability.

Sanusi, who made this assertion at the annual Ramadan symposium organised by the Movement for Islamic Culture and Awareness (MICA) in Kaduna, said that added to the above is the ethical character of their business, the unique feature of their deposits and the transactions, which he said can be a panacea for reviving the current debacle in the countries banking sector.

Speaking on the topic 'Islamic Solutions to the Global Economic Meltdown' the CBN governor said transactions, instruments and contracts under the Islamic financial system do not permit gambling, dealings in pork, alcohol, ammunition, pornography and any other products and goods that are not compliant with the Sharia rules and principles.

"As a value proposition, Islamic finance is market driven but with a moral dimension based on the Islamic value system as encapsulated in the Sharia. Lending is not a business in Islam. Linked to this therefore is the no interest rule. That is, you cannot earn interest on a loan nor be required to pay interest on loans. Any predetermined interest is prohibited."

He said due the good attributes of the system world over and its efficacy in tackling thorny issues in the banking sector and the economy in general, the bug is catching up in many countries, with only one Islamic institution in 1962 to the now over 300 operating in over 75 countries worldwide.

"Islamic finance is growing in various parts of the world with Bahrain, Malaysia and the United Kingdom as shining examples. It has moved from a mere theoretical concept to a practical reality. In recent years Islamic finance has grown rapidly across the world, conservatively estimated at 10-15 per cent a year and worth $750 billion in total assets.

"The number of Sharia compliant institutions worldwide has risen from one institution in 1962 to over 300 institutions operating in over 75 countries. The industry now has a global presence in Europe, Middle East, Asia, U.S.A., Africa and North America."

He then eulogised the attributes of Islamic banking, saying it can promote confidence in the banking system if properly administered and followed to the letter.

The CBN governor, in a message to stockbrokers and the press through Professor Ndi Okereke-Onyiuke, director-general of the Nigerian Stock Exchange (NSE), stressed that the one-week visit to China is not to seek investors for the five banks.

The clarification is coming a day after the CBN on Thursday accused some unknown individuals of making "strenuous efforts to deliberately twist information regarding its recent actions to sanitise the banking sector in order to malign and discredit the entire process."

Addressing stockbrokers and the press immediately after her arrival from a meeting in Abuja, the DG explained that the CBN Governor "is not going to China to sell the banks to Chinese investors."

He is billed to meet with members of the stock market community personally, on his return from China and would be accompanied by the new chief executives of the five banks -Oceanic Bank (John Aboh), Intercontinental Bank (Mamoud Layi Alabi), Finbank (Mrs. Susan Iroche), Union Bank (Mrs. Funke Iyabo Osibodu) and Afribank (Nebolisa Arah).

"He is not going to China to sell the banks to Chinese investors."

Consequently, rather than the new CEOs coming to address stockbrokers and the media on Monday September 7, Sanusi would make a presentation at the meeting and allow the chief executives to speak on their roadmap for the banks. This will be followed by a question and answer session with the stockbrokers and the press on a date to be fixed soon.

Mrs. Okereke-Onyiuke also assured stockbrokers of the understanding of the CBN governor on the issue of margin facilities and that "he is not hounding stockbrokers just yet, but taking it one at a time. He says he understands that you didn't go away with the loan because the shares are still there."

In the statement on Thursday, the apex bank maintained that the London road show was to explain the rationale for the sack of the executive management teams of Oceanic Bank (Cecilia Ibru), Finbank (Okey Nwosu), Union Bank (Barth Ebong), Intercontinental Bank (Erastus Akingbola) and Afribank Nigeria (Sebastine Adigwe) to the international community. In particular, the CBN said the visit was also targeted at the correspondent banks who advance credit lines to Nigerian banks, rather than being a forum to seek buyers for the affected banks.

"The governor and the new managing directors of the affected banks did not discuss the issue of selling the banks with any foreign investor or group of investors. The governor however reiterated that there is no law in Nigeria barring foreign investors from investing in Nigerian banks but the CBN will ensure that only foreign investors genuinely interested in the development of the Nigerian economy will be entertained," the statement added.

http://www.independentngonline.com/news/tfpg/article02

What do u expect.

He is getting more support for Islamic banking already

http://www.vanguardngr.com/2009/09/05/islamic-banking-will-promote-development-%E2%80%94-dr-fashola/

I really don't see anything wrong with Islamic Banking if opportunities are open to all. From reading about it, I actually like it. Basically, an Islamic Bank is a venture capitalist which creates opportunities for entrepreneurs. My only question is if it will be open to everyone and not only Muslims. Let's not use ignorance to breed prejudiced fears. We should be asking questions for clarification.

MrCrackles:

What do you mean by that?

Topic
I agree. . . A decent alternative IMO

I am having a change of mind after reading it very well, we sure need different alternatives in the banking sector. We could even go further to experiment on our indigenous ideas like the way we traded with ourselves before the white man came.

@Black_Revo, you have my props. My first instinct was like Hell no, here they come again with their Sharia selves. But before judging despite my prejudice, I read more about it to determine that it is very equitable for societal development. But what comes with it though? These are the questions. I have noticed that most upward mobile Christians have been converting to Islam to by absorbed into the Elitists group running Nigeria. Even Asari Dokubo became untouchable after becoming Muslim. This was the cause of my initial hesitancy because fairness is at stake.

this country belong to both muslims and christians, anything borrowd from either religion is for all.

@ larez
i realy agree with u, let study and ask questions about islamic banking. islamic banking is meant for both muslims and christians there is no descrimination, the only restrictions lies in the fact that it does not support buisinesses classified as unlawfull in sharia like prustitution, election campaign, gambling, brewry etc.

HOW IT WORKS
i will write on that latter