Nigeria, Islamism and the Islamic Development Bank
Category: Islamic Banking
In some ways I truly admire Mallam Sanusi Lamido Sanusi, the Governor of the Central Bank of Nigeria. He is not just a very intelligent, suave, populist orator; he is also a great strategist. While he still continues to be irritatingly loquacious and he stubbornly experiments with his inane ideas and policies which are destroying the capital market, the banking industry and the economy, one cannot but admire his single-minded commitment to foist his Malaysia-style Islamic Banking on Nigerians despite superior and rational arguments that have been canvassed by a number of informed people that a uniform and religion-neutral Non-Interest Financial Institutions (NIFI) Framework should be issued by the Central Bank of Nigeria to replace its extant NIFI Guideline. But that is not even the issue of our discourse here.
Not many might have noticed that Mallam Sanusi Lamido Sanusi has since taken a back seat with regard to the promotion and advocacy of Islamic Banking. His advisers and fellow Islamists must have told him he would help their Jihadist cause better if he worked from the shadows. Now, my friend and former colleague at the Nigeria Deposit Insurance Corporation (NDIC) where we were both Senior Managers in 1996, Dr. Yerima Ngama, the Honourable Minister of State for Finance, has stepped forward as the new face of Islamic Finance advocacy and promotion in Nigeria. He has even been designated the Islamic Development Bank “(IsDB) Governor - Nigeria” And the Vice President, His Excellency, Arc. Namadi Sambo, has found himself being pushed forward by his subordinates to give “Presidential endorsement” to the Finance Agenda of Political Islam. Kudos to SLS!!
Sanusi must be feeling triumphant that Islamic Finance appears to be on the march in Nigeria. He has succeeded in making all the financial regulatory bodies in Nigeria to sanction Islamic Finance in one way or the other. The Securities and Exchange Commission, the Nigeria Deposit Insurance Corporation, and more recently, the National Pension Commission have all made some adjustments to their regulatory guidelines to accommodate “Shariah-compliant” financial products and services.
The Transcorp Hilton Hotel, Abuja, played host to The IsDB- Nigeria Business Forum which took place from 15th to 16th March, 2012. The Islamic Development Bank and its partners pulled out all the stops to put up a display designed to impress its foot-print on the African Jewel south of the Sahara. It’s delegation included its Group President, Dr. Ahmad Mohamed Ali Al-Madani, Dr. Birama B. Sidibe (Vice President, Operations), Dr. Abdel Rahman Taha (CEO, Islamic Corp. for the Insurance of Investment & Export Credit), Khaled Al-Aboodi (CEO, Islamic Corporation for the Development of the Private Sector), andDr. Waleed Al-Wohaib (CEO International Islamic Trade Finance Corporation). The “Country Hosts” were said to be the Coordinating Minister for the Economy & Hon. Minister for Finance, Dr. Mrs Ngozi Okonjo-Iweala, Hon. Minister of State for Finance & IsDB Governor - Nigeria, Dr. Yerima Lawan Ngama, and Executive Secretary of Nigeria Investment Promotion Council (NIPC) –Eng. Mustafa Bello. Chicason Group, Jaiz Bank and Bank of Industry were the “Corporate sponsors” of the event. Sadly, the “Distinguished Special Guest of Honour and Patron of the Business Forum”, President Goodluck Ebele Jonathan, did not grace the occasion but was ably represented by Arc. Namadi Sambo.
Just last week, during the special meeting of the African Governors Forum on the Special Programme for the Development of Africa (SPDA) held in Khartoum, Sudan, the Nigerian Vice President announced while delivering his keynote address that the Islamic Development Bank (IDB) has set aside about $2billion dollars (about N310 billion) in support of Nigeria’s developmental programmes which is to span three years (2012-2014). By the way, the Opening Ceremony of the IDB programme was “graced” bySudan'sPresident Omar al-Bashir who is wanted by the International Criminal Court on war crimes charges.
In February, the Federal Government sought approval from the National Assembly for its intention to borrow $7.9 billion from the World Bank, African Development Bank, Islamic Development Bank, EXIM Bank of China and Indian lines of credit. The President indicated that the funds would be used to cover pipeline projects in the 2012-2014 External Borrowing Plan. Under the plan, government will borrow $2.64 billion annually. Even before the approval of the National Assembly, Dr. Yerima Ngama disclosed that Nigeria has already applied for US$670million “interest-free loan” from the Islamic Development Bank. This “interest-free loan”, however attracts a charge which the IDB’s Disbursement Manual calls “a modest service fee, not exceeding 2.5%, to recover part of the administrative costs incurred in project identification, appraisal and supervision”. However, if it is an OCR (Ordinary Capital Resources) Loan, the service charge is 4%. It is not clear yet whether Nigeria’s Loan request is considered an OCR Loan and what the proposed Profit and Loss Sharing arrangement is between the Federal Government of Nigeria and the Islamic Development Bank on the “interest-free loan” being sought.
If you are familiar with Nigeria’s history with foreign debts, you must have been alarmed as I was. As at 4th April, 2012, our Foreign Exchange Reserves were a mereUS$35,822,362,444.10 while our States and Federal Governments' External Debt Stock as at 31st December, 2011, totalled US$5,666,579,900 Our Domestic Debts stood at N5,622,843,712,000that is about US$36,276,411,045 using a conservative exchange rate of US$1/N155. The Debt Sustainability argument that our GDP can accommodate more debts is hollow. The reality is that our cashflow as a nation cannot sustain more debts! Nigerians should rise up to say NO to the government's plans to borrow about US$7Billion for the pipelines project. However, we should even be more alarmed that, under the guise of finance, the Political Islamists in the Federal Government want to surreptitiously lure Nigeria and Nigerians into indebtedness to the religious organisation, the Islamic Development Bank.
Some would argue that the Islamic Development Bank is merely about finance and that “money has no religion”. But is the IDB really all just about finance?
The IDB website (http://www.isdb.org) says much which is enlightening:
The Islamic Development Bank is an international financial institution established in pursuance of the Declaration of Intent issued by the Conference of Finance Ministers of Muslim Countries held in Jeddah in Dhul Q'adah 1393H, corresponding to December 1973. The Inaugural Meeting of the Board of Governors took place in Rajab 1395H, corresponding to July 1975, and the Bank was formally opened on 15 Shawwal 1395H corresponding to 20 October 1975.
The purpose of the Bank is to foster the economic development and social progress of member countries and Muslim communities individually as well as jointly in accordance with the principles of Shari'ah i.e., Islamic Law.
The functions of the Bank are to participate in equity capital and grant loans for productive projectsand enterprises besides providing financial assistance tomember countriesin other forms for economic and social development. The Bank is also required to establish and operate special fundsfor specific purposes including a fund for assistance to Muslim communities in non-member countries, in addition to setting up trust funds. The Bank is authorized to accept deposits and to mobilize financial resources through Shari'ah compatible modes. It is also charged with the responsibility of assisting in the promotion of foreign tradeespecially in capital goods, among member countries; providing technical assistance to member countries; and extending training facilities for personnel engaged in development activities in Muslim countries to conform to the Shari'ah.
The present membership of the Bank consists of 56 countries. The basic condition for membership is that the prospective member country should be a member of the Organisation of Islamic Cooperation (OIC), pay its contribution to the capital of the Bank and be willing to accept such terms and conditions as may be decided upon by the IDB Board of Governors.
In its 1440AH (2019 AD) Vision Document it clearly states:“As an Islamic development bank, IDB needs to be driven by a vision of development that is inspired by Islam. The Islamic vision of development has its roots in Religion (Deen), and is heavily governed by Divine Law (Shari’ah), ethics and morality (Akhlaq). It is predicated upon the premise that human beings are created by God to fulfil a specific mission.” IDB’s vision states: “By the year 1440 Hijrah IDB shall have become a world-class development bank, inspired by Islamic principles, that has helped significantly transform the landscapeof comprehensive human development in the Muslim world and helped restore its dignity.”
The Islamic Development Bank’s Disbursement Manual states as follows:
“The Islamic Development Bank operates according to the Shari'ah principles. Shari'ah is the set of rules derived from the Holy Quran, the authentic traditions (Sunnah) of the Prophet (peace be upon him) and the scholarly opinions (Ijtehad) which are based on the Holy Quran and the Sunnah. The principles of Shariah that govern Islamic banking are the following:-
- prohibition of interest (riba) in all financial transactions, such as: riba in debts, riba in sales, including forward currency deals and futures exchanges.
- Participation in profit and loss sharing, since return is not guaranteed in an Islamic transaction.”
The Disbursement Manuel also states: “IDB does not borrow from the market and its operations are sustained by share-holders capital, retained earnings and funds generated internally through its foreign trade and project financing operations. The IDB has no non-regional members. The IDB is an institution established by the Ummah, for the Ummah and operated and managed by the Ummah. The IDB finances trade and development projects both for the public and private sectors, finances large and medium sized projects and small enterprises in the member countries.” There is no doubt that the Islamic Development Bank is a religious financial institution dedicated to the promotion of Islam and Shariah-compliant finance for the benefit of Muslims. It is ridiculous when apologists say otherwise. If Nigeria were an Islamic country there would be no problem. But Nigeria is not an Islamic country and it is not part of the “Muslim world”. While there are Muslim Nigerians, Nigerians are a multi-religious people and the Nigerian state is constitutionally secular. So it cannot be OK for Nigeria to be a member of IDB or to be seeking loans from it. Nigeria has no business with IDB.
The erosion of Nigeria's secularity has been insidious over the years such that many Nigerians do not even notice it. The real issue here is POLITICAL ISLAM orISLAMISM: the effort to impose Islam and the Principles of Shariah in the political, social and economic space of a country. For Islamists, religion should not be private to the practitioner. The state and its organs must conform to Shariah Law. Some do not even understand Islamism so naively think there is no danger when our state institutions are allowed to promote Islam against other religions in the country.
Our Naira notes have Hausa words written not in our "abidi" anglicised text, in which the language is written and taught in schools, but with Arabic script. The insignia of the Nigerian Army similarly has Arabic writings. It was Gen. Ibrahim Babangida who arrogantly went and enlisted Nigeria as a member of the Organisation of Islamic Countries without the knowledge of his deputy at the time, Commodore Ebitu Ukiwe. Commodore Ukiwe lost his office unceremoniously when he told journalists that he was unaware of Nigeria’s membership as the matter was never discussed how much more approved by the Supreme Military Council. Nigeria became a member of the Islamic Development Bank in 2005 under the administration of former President Olusegun Obasanjo. One cannot help but wonder who Obasanjo was trying to impress by this unfortunate move. I do not recall the National Assembly discussing the issue and giving its approval for the appropriation of the country’s investment in IDB’s Share Capital. Nigeria presently holds 7.69% of the bank’s Paid-up Share Capital of 17.7826Billion Islamic Dinar or approximately US$ 27.32Billion as at 25th November, 2011, making it the fourth largest shareholding after Saudi Arabia’s 23.61%, Libya’s 9.47% and Iran’s 8.28% shareholdings. Shariah was introduced in some northern states contrary to the Nigerian Constitution. Sanusi Lamido Sanusi introduced Malaysia-style Islamic Banking contrary to the Nigerian Constitution and the Banks and Other Financial Institutions Act. Sanusi also made Nigeria a founding member of the International Islamic Liquidity Management Corporation and invested US$5million in its share capital. Sanusi had also been advocating that Nigeria should issue "Sovereign Sukkuk Islamic Bonds". And now the Federal Government is seeking loans from the Islamic Development Bank when we are not an Islamic country.
No doubt, it is might be deemed to be civil and politically correct to close one's eyes to these developments so as not to be seen as "intolerant" and not be accused of being "Islamophobic". Some non-Muslim readers may even reiterate the new mantra of “financial inclusion” as the reason why Islamic Banking should not only be accommodated in the Nigerian financial system but even promoted with state funds.
Religion is a very important part of the discussion because of the unfortunate role it plays in Nigeria's politics. It is actually the main tool being exploited by many politicians for ascendancy to office both in the north and in the south. Why was Gen. Ibrahim Babangida able to unilaterally make Nigeria a member of the Organisation of Islamic Countries? Possibly because of the fallacy that Muslims are in the majority in Nigeria? Why was a Governor able to single-handedly breach the Constitution of the Federal Republic of Nigeria which he swore to uphold and declared Shariah in Zamfara State and even the otherwise bold President Olusegun Obasanjo was intimidated not to challenge the act in the Supreme Court? Because Zamfara State is seen as a "Muslim State" since the majority of its indigenes is Muslim. Even the highly respected Muslim former Chief Justice of the Federation, Late Justice Mohammed Bello, declared that the introduction of Shariah was a contravention of the Nigerian Constitution. But today, some other northern states are Shariah states and the rights of other non-Muslim Nigerians are daily infringed there. Boko Haram has taken the cause of Islamism to a new level: it is carrying on a Jihad bombing, maiming and killing innocent people in the futile bid to make Nigeria an Islamic state.
Sanusi Lamido Sanusi and his fellow proponents of Malaysia-style Islamic Banking in Nigeria and the entrenchment of the Islamic Development Bank’s Islamist Agenda in our nation are actually on a "Financial Jihad". It is the continuation of the Islamist Agenda of Sir Ahmadu Bello, the Sardauna of Sokoto and Premier of old Northern Region, who famously said he wants to dip the Quran in the Atlantic Ocean and make Nigeria the estate of his Great Grand-Father, Usman Dan Fodio. The objective is to make out Nigeria as an Islamic country and ensure the imprint of Islam and Shariah Principles in the Nigerian government, our institutions and the Nigerian financial system. MallamSanusi Lamido Sanusi is one person that has perfected the practice of Taqiyya: Sacred Deception - the Islamic doctrine of deceit to defend and promote Islam; deception which advances Islam which is not regarded as sin. He has deployed the doctrine very well so far in his Jihadist activities. But not everyone is deceived.
I am against undermining the nation's constitution and our secularity to advance Islam or Christianity for that matter. We must defend Nigeria's secularity. We cannot and must not continue to condone the deliberate actions of those whose agenda is to advance Islam and portray us as an Islamic nation. No religion should be given preference by the government in whatever way. If Nigeria must borrow, there are numerous non-religious lending institutions around the world which do not have a religious agenda like the Islamic Development Bank. If IDB is just about finance as some think, why does its "Purpose" include to "foster the economic development and social progress of member countries and Muslim communities individually as well as jointly in accordance with the principles of Shari'ah i.e., Islamic Law."? Do the World Bank, Africa Development Bank, International Monetary Fund etc. have such an agenda?
The Islamic Development Bank is about Political Islam and the funding of projects is the bait to draw in poor nations looking for "cheap money". Nigeria does not need Islamic Development Bank's loans, interest-free or not, and its other greek gifts. We can do without Islamism’s financial agenda.