abdulkayus: Jaiz'll Add Value to the Economy - MD
Alhaji Mohammed Mustapha Bintube is the Managing Director of Jaiz Bank, the first full-fledged non-interest bank in Nigeria. Bintube has about thirty years banking experience. In this interview, he said the bank is now a reality and the future is bright. Excerpts:
Jaiz Bank started operation not too long ago, how will you describe the level of patronage so far?
We got our license on a special day which I always like to emphasize. We got it on 11-11-11 and we started operation in January this year. We started on a low key without much publicity and this was out of respect for the sensibilities of Nigerians. That was the time when there was ‘occupy Nigeria’, escalation of violence in some parts of the north and in Niger Delta area.
Since we started operations, we have been making steady progress in terms of number of accounts opened and in terms of the number of deposits and numbers of proposals that we have received. We receive proposal on a daily basis from businessmen, traders and others.
We have our challenges though and some of them are largely due to lack of understanding about the intents, purposes and objectives of the non-interest banking in Nigeria which has generated lots of unnecessary controversies.
In order to address this, we have embarked on several publicity initiatives aimed at educating and assuring Nigerians that there is nothing to fear about this new kind of banking model.
The second challenge is that because it is a new concept here in Nigeria, some of the financing instruments that are available from the Central Bank are all the interest bearing. For example, the treasure bills are interest based and by our nature, we cannot trade in it. I am however pleased to say that the Central Bank has made significant progress in terms of addressing and meeting some of these peculiar challenges. Overall, I can say that we are making progress by the day.
Who are your depositors? Can you give us the Muslim-Christian ratio?
I can’t tell you precisely in terms of the ratio, but I can tell you that the very first financing we did was to a Christian and after that, our biggest financing also was to another Christian, a very serious minded and focused business man called Daniel. If you talk about our customers, our suppliers, consultants etc, we have Non-Muslims and Muslims. So please let me also use this medium to tell Nigerians that Jaiz Bank is a business and it is open to all irrespective of race or religion.
Recently, there was SMS circulating and appealing to Muslims to invest in Jaiz and some people are taking that to mean a problem in the bank, what can you say about that?
I am very glad you raised this issue. First of all, I will like to assure our customers that Jaiz Bank is a safe and sound bank. There is no threat to our license. Those SMS are not from our bank and we don’t support it. We think that it is a deliberate ploy by some of our detractors to de-market us. As you know, some of the conventional banks have been known to deliberately de-market each other and which the Central Bank is strongly against. However, it could also be that there are some of our supporters who innocently spread these messages thinking they are doing us a favour, but my appeal to them is to kindly desist from circulating these messages because it is not helping us. Having said that, I would also say that if anybody is in doubt about the safety of the bank, we have the Central Bank, SEC and the NDIC who are the regulators. They can go and ask these organizations about our health. The records are there for all to verify and the regulators will even be the first to shout if we have any kind of problem. So I assure all our customers and prospective stakeholders and shareholders that the bank is safe and sound.
On the other hands, we are also intensifying our publicity so that people will understand us better. Honestly, we are now a reality and the future, I can assure, is bright.
Still in relation with the above, the SMS also said that you can open a Jaiz account with the Stanbic IBTC, how true is that?
That is also not correct! Let me clarify that Jaiz Bank and Stanbic IBTC were the only two banks that were approved by the Central Bank to carry out non-interest banking. However, Stanbic IBTC offers non-interest banking windows, while Jaiz bank is the only first full-fledged non- interest bank in Nigeria as at today. We are two distinct entities. Competitors? Yes, but we are also collaborators. Collaborators in the sense that because we are the only two in the industry, we have to collaborate in order to advance the cause of non-interest banking. However, Jaiz bank customers can only come to Jaiz bank to open or operate their accounts.
Non-interest banking is still relatively new in the country, can you explain to the ordinary people the concept of non-interest banking?
Non-interest bank is just an alternative method of financing. You have one which is interest based and the other which is based on non-interest principles.
Non-interest banking is based on the principles of profit and loss sharing which is based on partnership, financing of real transactions, meaning, there must be an underlining asset in all transactions.
Furthermore, Non-interest banks are based on the Sharia principles of ethics, fairness, transparency and objectivity. Consequently, all our transactions must undergo series of moral screening. By that I mean, non-interest banks cannot finance anything that is harmful to the society like tobacco, alcohol, anything to do with speculation and gambling with the people’s money.
People then ask, if you don’t give interest how do you make money? We make money in three different ways. The first is buying and selling. Meaning, we can buy an asset and sell at profit. Note that, non-interest banks are the only institutions authorized to engage in trade.
Secondly, through leasing where we can finance your factory needs for equipment and machineries and give out to you on a rental basis.
Thirdly, through partnership. Here, we can go into partnership with you on a joint venture based on a pre-agreed profit and loss sharing formula. Under this arrangement, we can jointly contribute capital into a business and then share profit or loss based on agreed principles. For instance, we can share profit based on a 40/60 or 30/70 sharing ratio or whatever is jointly and fairly agreed up on. Mind you if there is a loss (God forbid) we also share the loss based on the level of risk taken or the level of capital contributed by each party. By that I mean, if I, the bank, contribute 70 percent and the client contributes 30 percent and there is a loss, the bank will take 70 percent of the loss while the client will take 30 percent.
So simply put, non-interest banking is all about sharing risks and rewards.
What are the products that you are introducing into the market?
I will start with what we call Murabaha which is like I said earlier, buying and selling at a profit. The second is the Ijara which is leasing based on rental payments to bank and the third one is the partnership or what we call Musharaka.
To further break it down, we have on the retail side, Jaiz Home Finance, Jaiz Auto Finance, Jaiz Home Appliance Finance and more. For instance, if you want to buy a house or want to build a new one or you want to renovate your house, we can assist you with our Jaiz home financing product. We can also finance you to buy a car, big or small, new or second hand. For example, if you want to buy a new car, we can assist you. All you have to do is to contribute as little as 20 percent and the bank will contribute 80 percent and the car is yours. This gives you the convenience of owning a car as well as the convenience of installmental payments.
Any collateral?
The car will be the collateral including personal guarantee of your employers.
alhamdulilai for this
What about mortgage; what is the process?
You will identify the house you want, tell us how much it cost, we will inspect it, look at the legal document, conduct structural, professional and risk evaluation to make sure that everything is in order and also, based on the same principles highlighted above, the client makes his contribution as a way of showing commitment and the transaction is consummated.
How do you spread the payment?
For mortgage, we can spread payments over a period of 10 years. There is also what we call diminishing Musharaka or diminishing partnership. Under this arrangement, we will jointly purchase or build a house meaning, we are co-owners of the house. Then, you will live in the house and gradually pay-out or buy out the bank’s part of the ownership. So every year you pay part of the rent and also part of the bank’s share. This gives our clients the comfort of living in their houses as well as the convenience of installment buy-out arrangement.
Do you have specific agricultural product?
Yes we do, we have for instance, ‘Sallam’ for farmers, where a farmer, say a cocoa farmer, can use for financing inputs for his products or a wheat farmer who wants to grow and sell wheat to the Flour Mills. In case of financing his inputs, he will pay us with his products at a fixed price and at a future date. We in turn can sell the products to flour mills or other food and beverage manufactures. We are also exploring how to access the CBN Agricultural Financing scheme.
Recently, the bank got shareholders’ approval to raise additional capital. What is the update and what options have you chosen to raise the capital?
At our 9th Annual General Meeting, we obtained the approval of the shareholders to increase our capital base to N12 billion and the objective is in furtherance of our migration plan.
We have gone very far in this regard, I think right now we have about 80 percent of what we require, so what is remaining is only 20 percent, but even the 20 percent, there are people who have indicated interest to take that and this is because the bank has immense potentials.
The overall objective of this exercise is to enable us raise the required capital that will enable us achieve our plan of going national by next year, God willing. Our migration plan is to grow from a regional bank to a national bank and to Sub-Saharan Africa. By then, we will have branches in major commercial cities of all the states of the federation. Specifically, we would have branches in Lagos, Ibadan, Ilorin, Onitsha, Aba, Nnewi, Enugu, Port Harcourt, Calabar etc.
So, what is your current capital base?
Our minimum capital was N5 billion, we are now at about N7 billion. Our target is to up it to about N12 billion. Mind you the minimum that you need to go national is N10 billion, but we don’t want to start with the minimum and that is why we are targeting N12 billion.
Recently, the Islamic Index was introduced into the capital market, how is the bank taking the advantage of that?
Islamic Index is about buying and selling of shares especially by people who are ethically minded. Prior to this, about ten years ago, there was an Ethical Fund which was also listed. It is like another investable product which has its own kind of investment criteria. Islamic Index is also targeting certain ethical investors and like Jaiz Bank, the Islamic Index is not only for Muslims, anybody can buy and sell it.
I can tell you that with what has happened over the last ten years in the global capital market, the New York Islamic Index outperformed the other conventional instruments simply because of the principles underlining it. We are witnesses to what happened in the conventional capital instruments where people were known to have committed suicide because they lost all that they had. I am therefore, calling on Nigerians to embrace the Islamic Index because the benefits outweigh whatever the disadvantages that some people are talking about now. We will encourage our customers to invest in this laudable innovation from Lotus Capital.
How far has Jaiz gone in terms of electronic banking. If I have an account with Jaiz Bank, can I use Jaiz ATM to withdraw money outside the region the bank operates?
Yes you can. You can go anywhere in Nigeria and withdraw money or pay your bills with your Jaiz Bank ATM Card. I am also pleased to inform that the Jaiz Bank ATM machine does not only pay out cash, it also accepts deposit with direct credit into your account. We are one of the few banks whose ATMs have this facility. Besides, our internet banking platform is also ready. We are currently testing it in-house, but it will soon be made available to the public. We have also POS (Point of Sales) with some merchants and with this; you can go to certain places and use Jaiz Cards to purchase goods and services. So, let me say that Jaiz bank is an IT savvy bank, with a very robust and specialized non-interest banking application which is rated by international agencies as one of the best in the world.
How are you coping with the workforce?
Very well I must say. We recently had trainers from London and Dubai sponsored by Efina (Enhancing Financial Innovation Access). Part of the services they provide is called Capacity Building. They offered us free training services. They were with us for three days, training and expanding the capacity of our people. On our part, we are constantly training our staff and as part of the CBN requirement, we have a technical partner, the Islamic Bank, Bangladesh (IBBL) one of the best in South-east Asia. We have about five of them including their Director of Training who are training and guiding our people. So we have actually done a lot of training and we will continue to build capacity and develop people.
You have three branches now in Abuja, Kaduna and Kano, how many do you intend to add before the end of the year?
Before the end of the year, we intend to increase from three to ten branches.
Like where?
Mostly in North-east and North-west and like I said earlier, we want to go national by next year with branches in all the state capitals of Nigeria. After that, we will progress in line with our Five-Year Plan to go to Sub-Saharan Africa and I can assure you that we will make it.
You have been visiting governors in the north, but you are yet to go to the south, when will you go to the South?
We are also reaching out to governors in other parts of the country. We have written proposals to most of them, particularly Lagos State. I mean you cannot be a bank and not be in Lagos, Port-Harcourt, Ibadan, Abeokuta, Onitsha, Nnewi, etc. We will be there as soon as we get the Central Bank’s approval to go national. We are actually in touch with the governors and they have shown tremendous desire to welcome us when the time comes.
How many non-interest banks do you wish to see in Nigeria within the shortest possible period?
Well, like they say, the more the merrier, As many as reasonably possible. Healthy competition is good for the industry, but we are pioneers, guinea pigs if you like. I know that right now, people are watching and learning from our experience. I also know that there are people in Abu Dhabi, London and other places who are working on setting up this kind of bank. We are ready for them. However, we will be recognized in the anal of history as the first ever, Nigerian full-fledged non-interest bank.
Recently there was a legal tussle between the CBN and a member of the public challenging the legality of central bank granting a license for non-interest banking. How is this affecting the operations of your bank?
Our license has not been revoked by the court, because even the court threw out the case for lack of locus standi. Besides, we were not joined in the case. Be that as it may, the court made some statements which to some extent, created some doubts in the minds of our customers, but we were quick to write most of them by clarifying the issues which I can confidently tell you has calmed down the anxieties of our various stakeholders.
Let me therefore use this medium to assure Nigerians that even though the concept of non-interest banking started in the Muslim world, it has gone beyond that part of the globe. You now have the Islamic Bank of Britain, France, Italy etc. and coming down to Africa, you have Islamic banks in South Africa, Egypt, Kenya etc. Nigeria is currently competing for leadership with South Africa and Egypt. We are now number two in rating and I think we used to be number three, but honestly, Nigeria has no business being number two given its vast human and material resources. So if countries like South Africa and Egypt can offer Non-interest banking, why can’t Nigeria. More so, that it wants to be the financial- hub of Africa.
So, I am calling on Nigerians to embrace this kind of banking. It has its benefits in terms of employment generation, human capacity development and Foreign Direct Investment. What we have done now is that, we have given the Nigerian consumer a choice. As it is, if you want to buy a car, you have the interest based model as well as the non interest alternative. You have an option to freely compare the two and decide which is better for you as a consumer. Nobody is compelling you, but at least, you have a choice.
At Jaiz Bank PLC, we are determined to add value to the Nigerian economy. We will give our best to the Nigerian society in terms of adding value, in terms of providing an ethical platform for them to carry out their banking businesses. Let me assure you that all our transactions and interactions with the Nigerian banking public will be based on the principles of ethics, transparency, fairness and objectivity.
In terms of our market presence, we will like to be known and respected for our values, innovation, employer of choice, quality service and overall for our commitment to the socio- economic development of our people and the country.
source. Alhamdulilai for this pls we need it in lagos
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