Sunday, Decmeber 05,
2021 / 10:02 PM / Bukola Akinyele-Yisau for WebTV / Header Image
The Non-Interest Financial Institution Association of Nigeria (NIFIAN) recently hosted its 3rd webinar with the theme "Transformational Development through Non-Interest Finance".
Non-interest finance aims to align with economic development and social welfare across the globe. Non-interest finance in Nigeria has improved social welfare and financial inclusion.
The 2021 survey by Efina showed that 36% of adults are excluded from financial products or services. NIFIAN intends to research the contributions of non-interest finance and support accelerated inclusion.
The NIFIAN members offer savings, credit, investment, takaful and microfinance services to the ethical-minded investors demography.
Giving the welcome address at the webinar, the President of NIFIAN, Mr. Hassan Usman, said Financial markets are an engine or a catalyst for economic growth and development.
He acknowledged that banks spur innovation by identifying emerging entrepreneurs in innovative products and processes; it plays a crucial role in developing any economy. The overall economy folds into two sectors, the real sector and the financial sector.
Speaking on the importance of the finance sector, he said financial markets mobilise savings of surplus units. Usman said there is no doubt that contemporary non-interest finance relies on Islamic jurisprudence as a tool for society's economic and social development.
According to him, many believe that the bank of Saint George established in 1407 was the first depository bank. Still, in the Muslim world, they have had banks involved in letters of credit in the year 900; for 100 years, Islamic finance worked effectively among merchants who bought and sold on profit-sharing Mudaraba agreement sustaining economic growth and eradicating poverty.
Also, the principles of the SDGs are in the Makaseen of Shariah-compliant non-interest financial institutions, which can be a part of the future financial model of achieving a private balance. Islamic finance is growing in Nigeria, especially in transforming infrastructure. The challenge is how Islamic finance ensures balanced development for those financially excluded economically.
The keynote speaker, Dr. Abdullateef Bello, Managing Director, Datstrat Consulting Limited, speaking on the "Impact of Islamic Finance in developing Emerging Economies", explained that UNSDG 2018 said to increase the share of resources available for development purposes and to ensure that these resources are provided, Islamic finance offers a novel option".
He said in recent years, Islamic finance has come out with spectacular double-digit growth due to the dynamic market of Sukuk and growing investment in Islamic fintech and innovation; as a sector, its total asset has exceeded $2trn and may reach $3.8trn by 2023. Islamic finance is appealing in mobilizing financial access by fostering the inclusion of those deprived of financial services, especially those who don't currently use conventional finance because of religious reasons.
The banker 2021 report revealed that Islamic banks remain significantly more profitable than their conventional counterparts; the average returns on assets (ROA) for Islamic lenders stood at 1.37% in 2020 compared with the average of 0.51% for the global banking sector.
Speaking further on Islamic finance's contribution to economic growth, he said the Islamic financial system is inherently more stable and resilient to shocks; the number of sharia-compliant lenders reporting profits over $100m for the year fell from 74 in 2019 to 71 in 2020. He stressed that Islamic finance's contribution to economic growth due to its direct link to physical assets and the real economy has improved.
Speaking on Nigeria's ranking performance in Islamic finance, he said the country is not performing well in quantitative development, knowledge sharing, and awareness, but is doing well in corporate social responsibility (CSR).
He agreed that there is a positive relationship between Islamic finance development in economies of emerging countries.
He believed that Sukuk drives the growth of Islamic finance. Issuing Sukuk achieves financial stability, improves financial inclusion, and drives sustainable development. Also, Islamic finance institutions are supporting financial inclusion in Africa.
Speaking on the infrastructure gap, he said Nigeria's infrastructure is weak and requires over $221bn to address the gap. He noted that the Islamic finance industry had a long way to contribute to emerging economies.
According to him, Nigeria has benefitted a lot through the issuance of Sukuk. He said international Sukuk issuance of Nigeria is about 0.05%, domestic issuance of Nigeria Sukuk in Africa is o.110%, and about N1.9bn so far, FGN Sukuk is about 2.20%.
He believed Islamic finance is transforming the world, mainly through Sukuk. He charged NIFIAN to engage in partnership, provide resources, be transparent, and manage critical knowledge.
Dr. Paul Oluikpe, Head Financial Inclusion Delivery Unit & Development Finance Department, CBN, spoke on achieving financial inclusion through policy development for Non-Interest banks. He observed that financial inclusion gives access to a broad range of products that meet the needs of the people affordably.
According to him, products and services are not restricted to payment, savings but include Sukuk and other non-interest products. He said the Central Bank of Nigeria wants to diversify products in the Nigerian landscape to have access to each product at an affordable rate.
"CBN is strengthening the financial system to be a win-win collaboration that benefits the excluded and encourages innovation", He added.
He cited the 2014 Takaful guideline as a form of insurance that allows both religions to access insurance products. Also, CBN implemented micro-insurance for a low-income segment of the countryâ€™s population and guidelines of non-interest banking. CBN is committed to driving the inclusive growth of the economy.
The CBN Director charged non-interest financial institutions to do more in financial inclusion. Non-interest finance is a critical tool to reach the unbanked population segment.
He highlighted where Nigerians could access non-interest intervention which includes;
Mrs. Adenike Adeboye, Head, Business Development, Marble Capital Limited, moderated the event.