The Sun News On-line|Money Market

The Nigerian Muslim community may soon witness a new dawn in their banking transactions as the International Finance Corporation (IFC) has indicated its intention to partner the nation’s financial institutions to innovatively channel the Muslim world's growing financial resources towards meeting development challenges in the country and the world at large.

In a recent statement, the IFC, which is the private sector arm of the World Bank, hinted that the concept which is already being promoted in Nigeria by some of the 24 banks, including Bank PHB Plc, would, in the next few months, receive fresh impetus from it, given its extensive expertise in Islamic finance.

The new push for increased patronage for Islamic banking in the country and the world, the corporation noted, was part of its strategies to deepen the growth of Islamic finance across the world through the introduction of new financial products and derivatives in emerging markets.
According to the IFC, the principles of Islamic finance, which adhere to Islamic Shariah law, has as its most basic features a requirement that an investor and borrower share in the risk of a venture, as well as a ban on charging interest. It also prohibits investment in certain industries, like gambling or selling alcohol.

At the moment, most Islamic investors are targeting investments with a positive social impact, an option that makes IFC a particularly attractive business partner in light of its development mission.
Over the years, some Nigerian financial institutions have developed products with Islamic banking features as the move to give adherents of various religious groups an opportunity to practise their faith.
Islamic finance took off less than 40 years ago, and interest in this niche market has broadened rapidly over the past decade as huge financial liquidity in the Middle East, accelerated by high oil prices, has also intensified demand for Islamic finance investment products.

Considering that most people in Muslim countries do not use conventional banking services, owing to religious and cultural reasons, the IFC believes that making Islamic finance products more available in those countries could help develop financial markets and promote economic growth, especially by increasing access to education, small business financing, and housing finance.
THE corporation observed that Islamic finance represents an untapped source of capital and a new frontier of business opportunities that will help it meet the goals for increasing investment in the world's poorest countries.

Only recently, the IFC structured a $20 million investment to support the first multitranche, mortgage-backed securities deal from the United Arab Emirates, based on Shariah-compliant financing.
In April 2008, the transaction was hailed as the best "Islamic finance deal of the year" by Euromoney, a leading financial publication. The corporation’s, the Islamic Financial Services Board, and the World Bank recently held a seminar in Bahrain to help increase awareness of corporate governance issues in Islamic finance.