From Adanna Nnamani, Abuja
Former Emir of Kano and former Governor, Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi has assured that efforts to advance Islamic finance and banking in Nigeria was not a ploy to Islamise the country as erroneously believed by many.
According to the ex-CBN Governor, the belief stems from inadequate awareness and conspiracy theories by a small group of elites who want to leverage the misconception for political gains.
Sanusi made the statements at the 5th African International Conference on Islamic finance themed “Infrastructure Financing, Sustainability and Future of African Markets 2.0” held in Abuja on Tuesday.
He explained that Islamic finance is of great advantage to investors and governments, both Christian and Muslims as it not only eliminates interests for borrowers, but has connection to the real economy.
He said; “When the government issues bonds in the capital markets, investors are just looking forward to getting their interests and capital and it is easy to track the money and where it goes to. But with Sukuk, it is possible to know exactly what the money will be used for.
“The government of the United Kingdom, the government of South Africa, the government of France, they said that they want to issue Sukuk. In fact when we set up the International Islamic equity Management Agency, the headquarters in Luxembourg. So, now those countries don’t talk about Islamization, they see it as a product. You are talking about diversification, you are looking at costs of financing. That’s one dimension to it.
“The second dimension to this is if you look at the Nigerian political discourse in general, whether it’s ethnicity or religion, this is not something that happens at the level of the people. It’s a small group of elites appropriating discourse, and using it for political gains. I could give you a few examples. When we were having the attempt to license Jaiz. I was in the central bank and right behind the central bank, you’ve got the National Christian Center. So CAN was having a meeting. And the entire conversation was around the central bank trying to Islamize Nigeria, and about licensing that bank. One of the participants in the meeting, a Cardinal, Cardinal Onaiyekan sent me a message and said, “We’re having this meeting, and there’s this whole culture of Islamic banking. Can you explain to me what it is? And I said, Cardinal, please ask the President of CAN (Because I could just walk across). So ask him for permission for me, and my team to come and answer any questions. The Cardinal told them and they said, no, no, we don’t want to see him. Because they were not really interested in the answers. They wanted to issue statements that we were going to Islamize Nigeria.
“And I always knew that the best thing was to close your ears to this noise. Do what is right, now we have the Jaiz bank. We have a number of other companies. Has Nigeria been Islamized? Everybody has stopped talking about it. For me, I think sometimes it’s noise just to stop it. Sometimes it’s a lack of awareness. We try to downplay the Islamic element of it, and basically push up the issue of financial inclusion, the diversification issue of the real economy, the issue of risk in the financial system.”
According to Sanusi, the Islamic financing industry is equally a platform for people who do not want to put their monies into illicit businesses to invest.
“We now even have a convergence of several forms of financing that’s ethical in general. This sometimes is not just about avoiding interest. You’ve got a lot of people who do not want to invest in businesses that support narcotics, tobacco or alcohol, or gambling, because they destroy society. You’ve got people who do not want to invest in businesses that support say, pornographic, or businesses that destroy the environment. They’ve got all sorts of green finance, you’ve got some ethical funds. And Islamic finance is just one component of a broad range of classes of assets. So people will do this for a lot of ethical reasons, “he said.
Also speaking, Vice President, Country Operations, Islamic Devon Bank and former Minister of Finance, Mansur Muhtar, disclosed that the Islamic Development Bank (IsDB) would in a few days be releasing the sum of $150 million to the Nigerian government as contribution for a special agricultural project.
“Islamic banking is asset backed and based on participation and risk sharing, we also have to look at other elements which are the social and environmental sustainability that are consistent with Islamic principles of supporting infrastructure
“We have been making efforts in facilitating the different levels, in terms of regulatory framework, we have been working with all the international Islamic finance regulators and bodies to set those standards to assist in developing those regulatory frameworks. To really demonstrate our commitment, we have gone ahead to issue the first sustainability sukuk.
“We focus on projects in social and fiscal infrastructure, to implement these projects we place a lot of emphasis on regional connectivity. For example, in Nigeria in the next couple of days, the IsDB will be making a contribution to a project that is aimed at supporting the development of special agricultural processing zones and we will be committing $150 million dollars but we have also been involved in several other projects in Nigeria.” He said.
In her remarks, Minister of Finance, Budget and National Planning, Zainab Ahmed said that Islamic Finance is one of the reliable financing options that the FGN has been exploring in delivering infrastructural projects and to also reduce the risks of development setbacks.
The Minister lamented that despite Nigeria’s demographic composition and increasing demand for Islamic finance, the country’s Islamic finance assets have remained largely insignificant.
According to her, one of the factors thwarting the development of Islamic finance in Nigeria is the impression that Islamic finance is just for Muslims thereby discouraging members of other religions from keying into the sector.
She said “The FGN has explored financing options that offer long-term viable sources of finance for its infrastructure projects, one of which is Islamic finance. Islamic finance has distinguished itself in bridging Nigeria’s infrastructure gap by promoting investments in key economic sectors like healthcare, education and transportation. The asset-backed nature and risk-sharing components of Islamic finance structures help improve financial sector stability and make them appropriate for infrastructure public private partnerships.
“Islamic finance instruments like Sukuk are being utilised by sovereigns and corporates around the globe for post pandemic recovery. The recorded success of our sovereign Sukuk issuances and the market anticipation towards the recently announced FGN Sukuk III demonstrates the huge potential that Islamic finance offers in achieving the private sector participation, financial inclusion and fiscal discipline needed to attain an inclusive, resilient and sustainable Nigerian economy” she noted.