Why Non-Interest Banks Should Tap into the e-Naira


Friday, November 12, 2021 / 12:25 PM / By Bukola Akinyele-Yisau for WebTV / Header Image Credit: WebTV

Non-interest banks in Nigeria have been advised to tap into the recently launched "e-Naira" digital currency by the Central Bank of Nigeria. This will help in deepening financial inclusion, improve trade and enable seamless transactions in the financial market.

Dr. Muhammad Jidda, the CEO, Alhumaidy Global Financial Services, made this point while providing his perspective on "Islamic Finance and The Adoption of Digital Currencies in Nigeria".

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Looking at the adoption of E-naira digital currency and non-interest finance in Nigeria, Dr. Jidda believes it's a good development from the Central Bank of Nigeria in driving the economy through digital currency. He said CBN regulates e-naira, and the main focus of digital currency in Shariah is regulation. e-Naira is controlled and can be used by the non-interest finance market.

He called on other African countries to emulate the CBN and adopt a national digital currency. Jidda was of the view that the creation of the e-Naira would enhance global trade for the country.

He also advised ethical and shariah-compliant investors to leverage the digital currency for their business and transactions in Nigeria and across the globe.

Speaking on digital currency, he said cryptocurrency is virtual currencies used in transactions like fiat money. He said Cryptography is encrypted,  and there are many types of cryptocurrencies. The most decentralized of them was the bitcoin invented by Satoshi in 2009. He noted that cryptocurrency is a decentralized digital currency.

Giving further insight on cryptocurrency as a significant disruptor to global financial transactions, he believed that crypto is scientifically disruptive as it has brought innovation in the era of digitization.

On the shariah issues facing cryptocurrency or digital currencies, he said sharia recognized assets as Iman if it passes all the prohibitions in sharia such as usury, gambling, and uncertainty. According to him, bitcoin can be adopted as a currency because people are familiar with it. He stated further that cryptocurrency is well known to people due to its value. 

Looking at it from the "Maliki" point of view, he stated that if people accept something, it brings value to humanity and the economy; it can be used as property and currency. He said cryptocurrency is globally accepted, and people are making use of it.

In trading in cryptocurrency, he said, according to Shariah, crypto can be Halal or Haram. He said there is yet to be agreement amongst Shariah scholars if cryptocurrency is  Halal or Haram. He added that Islamic scholars need to conduct detailed research on crypto to clarify its value to the Islamic Finance market.

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Dr. Jidda said crypto could be "Halal" as countries like Malaysia, a leading Islamic finance market globally, have accepted cryptocurrency assets, with guidelines and regulations alongside countries like Singapore and the United Arab Emirates.

He said the global acceptance of crypto is one of the factors that Shariah should consider. He said the "Maliki" school of thought always looks at what people accept as customary, and it can be Halal

From the perspective of Islamic jurists, whether cryptocurrency, including bitcoin, can be used for the international non-interest finance market, he said the increase and acceptance of cryptocurrency would make it qualify as a medium of exchange

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