How Islamic Microfinance Banks Can Support MSME Growth in Nigeria - AbdulQadir Abdullateef


Friday, October 30, 2020 / 1:00 PM / Bukola Akinyele for WebTV / Header Image Credit: WebTVNG

Proshare Nigeria Pvt. Ltd.

Islamic Microfinance Banks have been described as vital agents that can support the growth of Micro-enterprises in Nigeria. Mr. AbdulQadir Abdullateef the Co-Founder, Islamic Knowledge, Cairo, Egypt disclosed this in a recent discussion on developments in the non-Interest finance market in Nigeria.

According to him unlike conventional microfinance banks, the non-interest environment provided by the Islamic microfinance banks creates opportunities for funding of micro-businesses which constitute over 70% of the micro, small and medium-sized enterprises (MSME) in the domestic production value chain.

He said the Islamic micro finance scheme is similar to the conventional microfinance in terms of decision making and is viable for people of all faiths.

Reviewing Islamic microfinance, he noted that there are several models that have non-interest products and components which include Wakala, Zakat, Qard Hassana, Mudaraba and Musharaka.

"To promote this non-interest products, we must survey the needs of MSMEs, low-income earners and the unbanked people based on their demographics. Islamic Microfinance has the potential of contributing to the socio-economic development of the nation, especially addressing poverty eradication and financial exclusion".

From the African regional perspective, he said at the moment there are currently only 3 countries that operate Islamic microfinance services which include Mali, Nigeria and Cameroon.

He believed a progressive review of the guidelines and policies for Microfinance banks should be a continuum by the Central Bank of Nigeria (CBN), to achieve sustainable socio-economic development.

Giving a historical overview of microfinance banking in Nigeria, he highlighted the fact that the CBN has initiated policies in the 1960s, 1970s and 1980s but was amended in 2005, 2012, 2018, 2019 with a supervisory regulatory framework that has been in effect since April, 2020. 

He suggested that the government needs to promote microfinance services by providing socio-economic infrastructures for the sector and also look into the crucial aspect of managerial skills.

In terms of operations he pointed out that Islamic microfinance by design can finance petty traders, thereby increasing economic empowerment and reducing poverty in the country.

On the outlook for Islamic Microfinance Growth in Nigeria, Abdullateef said from his research most Microfinance banks in Nigeria are conventional. Speaking further he stated that as at December 2019 Nigeria had more than 900 Microfinance banks but few Islamic MFBs even when the country has a Muslim population of 50%.

To unlock the potential outlook for Islamic microfinance in Nigeria, he highlighted several areas in which it can support the economy, including the following;

  • Women empowerment as they contribute majorly to small businesses,
  • Youth empowerment to drive national productivity
  • Agriculture to boost economic growth and deepen socio-economic activities.

As at 2005, the Central Bank of Nigeria according to Abdullateef reported that the contribution of micro-finance to the economy was 0.25%. 

Related Video

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Related News

1.      Abdullateef to Speak on The Role of Islamic Microfinance on Poverty Eradication in Nigeria

2.     Islamic Finance Is the Best Option For Real Sector Development In Nigeria - Ahmad Barau

3.     The Principles of Islamic Finance Align With The 17 Goals of The UN - Saeeda Ahmed

4.     Saeeda Ahmed To Speak on SDGs, Women Empowerment and Islamic Economy

5.     Coronavirus Presents Islamic Fintech with Opportunities and Challenges - Bashar Al-Natoor

6.    Nigeria Should Leverage The Halal Market To Grow Its Non-Oil Sector - Jude Chime

7.    Chime Jude To Speak on The Halal Market: Opportunities for the Nigerian Economy

8.   Fintech Is a Viable Vehicle for Deepening Islamic Finance In Nigeria - Muhammad Jidda

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Related News