Friday, December 10,
2021 / 11:00 AM / Bukola Akinyele-Yisau for WebTV / Header Image Credit:
Millions of Nigerians can have access to micro-credit through the
activities of Islamic microfinance banks in the country. This plays a major
role in tackling poverty and serves as a tool for economic empowerment.
Mr. Adnan Opeyemi Salaudeen, Research Assistant, International Islamic
University, Malaysia explained the role of Islamic microfinance institutions in
economic development & poverty alleviation.
He said apart from micro-credit, Islamic microfinance banks provide micro-savings, deepen financial inclusion, and accessibility to other financial services to poor people, low-income earners, and unbanked communities.
Assessing the factors hindering the establishment of Islamic microfinance banks in Nigeria, Salaudeen highlighted the following;
- The Share Capital: There are three (3)
categories of microfinance as One unit, State unit and National unit, the
share capital required for establishing a microfinance bank in Nigeria is
that One unit must have N30m capital and cannot open more than one branch
within the local government. Share capital is a huge challenge for Islamic
- License: Licenses are not feasible for
Islamic microfinance to get, unlike conventional microfinance.
- Framework: The Central bank only issued
the BOFIA Act for banks but provided only guidelines for Islamic
microfinance banks and the framework is not good enough for IFIs.
- Scholars and Shariah advisory
committee need to take action to see the establishment of the Bank Act and
proper framework for Islamic microfinance.
- Awareness: Globally Islamic finance
industry is facing huge challenges in terms of awareness.
- Human Capital: Human capital resources for
Islamic finance are low in terms of training and schools.
- Islamic Fintech: Financial digitalization is
winning the whole world and IFIs should embrace technology.
- Misconception: The misunderstanding of IFIs is
at a high level in Nigeria. Most Nigerians believe it is only for Muslims,
and also some believe Islamic financial institutions are charitable
organizations for Islamization.
Sharing his thoughts on how to enhance financial inclusion through
Islamic microfinance, the research assistant believed that social finance is
scarce. He decried the fact that the poverty rate across Muslim countries is
The researcher was optimistic that financial inclusion can be enhanced through credit plus. He highlighted five steps to achieve a credit plus plan, which include;
Credit by giving loans to people
- Micro Takaful:
Islamic microfinance banks can also offer insurance by using micro Takaful
to help them with risks such as credit risk, feasibility risk.
With more products, Waqf fund, Zakat fund,
sadaqah fund can engage all these in institutions for social finance and
enhance financial inclusion.
- Training: Building
capacity, creating more awareness on the value of the credit plus plan
Speaking further, he explained how institutions and governments could
key into Islamic Microfinance banks to achieve inclusive economic growth in
Nigeria. According to him, institutions could assist at the Macro, Meso,
and Micro levels.
"The Government can create Musharakah products with
microfinance to generate fund or Sukuk, also the government with
Central Bank of Nigeria (CBN) need to come up with legal and supervisory
frameworks. The government needs to open the door for International ventures, he added.
He stressed that training centers, universities, experts, religious centers, and Islamic scholars are needed to achieve Islamic financial literacy and influence people positively, invest in social finance, and have clear documentation to explain to people what Islamic finance is all about.
Microfinance is a poverty alleviation mechanism that provides credit and other financial resources to poor, low-income households and SMEs. The initiative of microfinance started in 1976 with Grameen Bank in Bangladesh.
Please visit https://conference.iifpnigeria.org/#registration to register or contact Monsur - 08034459801, Tunmishe - 08035803197 Wasilat -08132501405 for partnership, sponsorship, and registration.
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