Increasing access to finance through non-interest (Islamic) banking
Innovation Forum
29 July 2009

In response to the growing interest of investors and banks to establish non-interest (Islamic) banking in Nigeria, EFInA hosted its second innovation forum titled: ‘Increasing Access to Finance through Non-interest (Islamic) Banking’ in Abuja.

Modupe Ladipo, Chief Executive Officer, EFInA stated that the results from EFInA’s Access to Financial Services in Nigeria 2008 survey showed that 92% and 86% of the adult population in the Northwest and Northeast geopolitical zones respectively is unbanked. In light of these findings, Islamic finance was considered as a potential innovative approach to increase access to finance for the unbanked.

Speaking at the Forum, the Central Bank Governor, Sanusi Lamido Sanusi lauded EFInA for hosting a forum on such a topical and important issue that could have a significant impact on improving Access to Finance in Nigeria. He said the introduction of non-interest banking will support financial sector deepening; enhance product offerings; and increase enhance investment in the economy. He reiterated that establishing non-interest banking is one of the FSS 20 2020 initiatives to establish Nigeria as a hub for financial services in Africa. He stated that CBN recognises that the critical success factors for establishing non-interest banking in Nigeria, are promotion and collaboration between stakeholder agencies, finance ministry officials, judiciary and securities industry regulators to develop a robust framework.

The international guest speakers at the Forum were Omar Shaikh and Safter Sarwar from the Islamic Finance Council, UK a not for profit organisation, established to promote the Islamic finance industry both locally and globally. Mr. Shaikh and Mr. Sarwar shared their views on the state of the global Islamic Finance Industry, and highlighted that the industry is worth approximately $1 trillion and growing between 15% - 20% per annum.

Thought leaders in the Nigerian financial sector shared their perspectives on the opportunities and challenges of providing Islamic Finance in Nigeria. Hajara Adeola, MD/CEO, Lotus Capital Ltd highlighted the potential of Islamic bonds (Sukuk) to attract local and foreign investments for infrastructure, citing the $1bn Emirates Airport, Dubai as an example. Mohammed Bintube, MD, Jaiz International Plc stated that as at Dec 2008, the estimated Islamic Banking market size in Nigeria was N4.35 trillion.

EFInA will facilitate roundtable discussions with key stakeholders to ensure the appropriate legal, regulatory, tax and supervisory framework is implemented to support the roll out non-interest (Islamic) banking in Nigeria.