Uche Usim, Abuja
Managing Director of Nigeria Deposit Insurance Corporation (NDIC), Mr Umaru Ibrahim on Thursday disclosed that the total assets of non- interest banks and window rose to ₦186.46 billion in June 2019 from ₦66.96 billion in 2015.
He added that their total assets against those of the banking industry stood at a paltry 0.49% as of June 30, 2019.
Ibrahim, who made the disclosure at a conference on sustainable Islamic finance in Nigeria also revealed that total deposits stood at ₦121.68 billion, or 0.53% of the industry total during the same period, while financing stood at ₦59.81 billion, 0.38% of the industry total as at the end of the quarter, June 30, 2019. Quoting EFINA report, Umaru said: “Access to financial services in Nigeria Survey 2018 data, 36.6 million adults representing 36.8% of 99.6 million Adult -population in Nigeria are financially excluded. Of particular concern, 62% of the 23 million adults in the North West and 55% of 12 million adults in the northeast are financially excluded.
“One of the key findings of the Central Bank of Nigeria (CBN) National financial Inclusion Strategy review was that low or non-adoption of financial products was due to cultural and religious factors especially in the Northern part of the country. Based on the aforementioned scenario and the prospects therein, we wish to cease this opportunity to call on investors to invest in the establishment of non-interest deposit money banks and non-interest microfinance banks to take care of this underserved segment of the population,” he explained.
The NDIC boss noted that the conference further seeks to unearth factors militating against the seamless operations of the Non-Interest banking sector in Nigeria in order to enable it effectively discharge its responsibilities which include, wealth creation, poverty reduction and job creation,” he said.
He added that if non-interest finance sub-sector was given adequate attention and patronage, it is capable of contributing positively to sustainable economic growth and development of the Nation. This, he said had been clearly evidenced by the two very successful Sukuk issues are undertaken by the federal government through the Debt Management Office (DMO).
“It is in that regard that it becomes imperative to throw our searchlight on the non-interest banking sub-sector and dispassionately come up with ideas and solutions to make it live up to its potential,” he said.
He listed emerging risks facing Islamic banks to stem from underlying structural economic weaknesses, inflationary trends and depreciating currencies – all developments that could potentially destabilise liquidity, raise non-performing financing and erode capital.
“Foreign currency risks also remain a significant concern for regulators and Islamic banks alike. Equally, there exist structural challenges around liquidity management and legal accommodation in terms of existence and mechanisms for dispute resolution.
“To a large extent, issues that impede access to finance include; ignorance, lack of education, lack of trust, poverty, security challenges, high levels of informality in the economy and for Islamic banking- lack of awareness.”
In his remarks the Managing Director of Jaiz Bank Plc, Hassan Usman appealed to regulators such the financial sector regulators to create Sharia-compliance liquidity management instrument for non-interest banks to invest in.
In his presentation titled “The implementation and operation of NIB in Nigeria: Jaiz Bank Experience”, Hassan noted that one major critical area that is yet to receive adequate attention is Sharia-compliance Liquidity Instrument.
“We operated for six years without any LMI in the market and as such we have lost so much income by holding in cash with CBN at zero return. There is need for the leading regulators of financial system to work together towards creating short-term LMI for market.
“The CBN can also hasten its efforts towards creating Sharia-compliance variants of all its intervention funds in order to ensure a level operating fields for customers,” Usman said.