Friday, October 30, 2020 / 1:00 PM / Bukola Akinyele
for WebTV / Header Image Credit: WebTVNG
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
- Youth empowerment to drive national productivity
- Agriculture to boost economic growth and deepen
As at 2005, the Central Bank of Nigeria according
to Abdullateef reported that the contribution of micro-finance to the economy
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