Getting a Slice of Islamic Finance

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Funke Olaode

It was classy gathering of accomplished Muslim leaders who have done well for themselves in their various endeavours. They were gaily dressed in corporate attires. Looking very successful, they trooped out in large numbers to tap from the knowledge of seasoned professionals on how to grow their finance, assist the nation economy and help and humanity. The venue was Metropolitan Club on Kofo Abayomi Street in Victoria Island-Lagos. The event was the annual business luncheon organized by Forum for Islamic Education and Welfare with the theme: Islamic Financial System: A Panacea for National Economic Development.

Featuring a distinguished assembly dignitaries including the successful business man and President, Muslim Ummah of South West Nigeria (MUSWEN), Alhaji Sakariyau Babalola, Executive Secretary of MUSWEN, Prof. Dawud Noibi, former Executive Director of Thisday, Mr. Deji Mustapha, Managing Director of Istabaraqim Nigeria Limited, Alhaji Rafiu Ebiti and wife, Bisi, MD/CEO, CRC Credit Bureau, Alhaji Tunde Popoola, former Minister for Agriculture, Alhaji Raheem Awodele, group head, non-interest banking, Sterling Bank Plc, Dr. Basheer Oshodi, Member, CBN, Financial Regulations Advisory Council of Experts, Dr. Bashir Aliyu Umar, Managing Director, Arabel, Mrs. Shareefah Abiola Andu, Director, Brains and Hammers, Mr. Adbulmalik Mahdi, Managing Director/CEO, Jaiz Takaful Insurance Plc, Momodou Musa Joof, representatives from the Pakistani Association of Nigeria and other corporate titans.

Founded in 1994 by a group professionals from diverse backgrounds, Forum for Islamic Education and Welfare is a platform for the improvement of the knowledge and practice of Islam by members and the Muslim host community through seminars, workshops, and formal Qura’nic session. As the name indicates, it also serves to promote the welfare of the people especially that of the under-privileged and striving Muslim youths seeking opportunities to better their lot. However, the major goal is to enhance moral, religious, economic and physical wellbeing through charitable activities. In line with the association’s vision, it has secured a 4,000 square meter land within the Lekki Phase ll Scheme from the Lagos State government to build an Islamic Centre with an estimated cost of N2 Billion (about $15 million). The centre will comprise of a mosque, multi-purpose hall, educational and recreational facilities, ICT resource center, well equipped library and other welfare facilities.

Speaking on the efforts of the forum, Alhaji Babalola said the promotion of socio-political economy of a nation cannot be over-emphasized. He also sounded his opinion on the sustained commendable effort at bridging the gap between Muslim elites and the larger Ummah. Taking a cursory look at the state of economy at both national and global levels, Babalola argued that humanity yearns for an alternative to unbridled capitalism that is ravaging the world as not a few of the world’s leading economic thinkers and as well as business leaders have pointed to the Islamic financial system or Shari’ah compliant and ethical financial system as the hope of humanity.

The adoption and promotion of Islamic financial system by many non-Muslim global institutions is reassuring while the positive disposition of the leading global financial institutions such as the World Bank and International Monetary Fund make Islamic financial system an indispensable pillar of the modern global economic system. According to him, more and more people now see the Islamic financial system as important tool that could help the nation’s drive towards economic recovery. He noted that the success recorded during the recent N100 billion Suku bond issue by the federal government which was over-subscribed further confirms that the Islamic financial system has come of age and has come to stay.

Babalola rounded up his address by seizing the opportunity to call the attention of Muslim stakeholders at the forum to the imperative of the participation of Muslims in the economic development of the region in particular and the nation in general.

In his lecture titled, ‘The Islamic Financial System: A Panacea for National Economic Development’, the guest lecturer, Dr. Bashir Aliyu Umar described Islamic finance as a financial system that is based on adherence to the Shariah or Islamic laws because it offers services, products and instruments based on compliance to divine laws. He stressed that all commercial and financial transactions should be free of Riba, which is usury or interest and gharar which means lack of uncertainty which could be caused by the lack of information or control in a contract or its conditional ties. These prohibitions combined together he said form the bed rock of Islamic finance.

Throwing more light on the alternative to interest-based lending, Islamic finance he said adopts asset-backed financing which uses a number of instruments ranging from Musharakah which involves partners providing funds for ventures, with profits shared according to their investment capital, and the loss is borne by them in the same way. Mudarabah financing is when one partner gives money and the other party provides his entrepreneurship to invest and manage the project while Salam is another model of financing in Islam. It is like a sale where seller undertakes to supply some specific goods to the buyer at a future date. While all these models present a better understanding of how Islam finance works, he took time to differentiate between Islamic and conversational finance. While he enumerated different principles and business framework that guide the two, the bottom line is that Islamic finance modes are based on the Shariah while conventional finance business activities are purely based on secular principles and not based on any religious laws or guidelines.

With its numerous benefits, the rate of financial exclusion in Nigeria is still very high at 41.6 percent. How can Islamic Finance help businesses and promote entrepreneurial skills? From its creativity, the system is one of the best fund to access. He noted that there is a lot of misconception about Islamic finance. The reasons why it hasn’t had much impact in the nation’s economy is that majority believe that it is free. He explained that the bank is an investment bank like others, an ethical finance for economic growth though interest free.

After a one hour lecture which gave an insight on how people should take advantage of the model to drive the national economy, he concluded that Islamic finance has been successfully institutionalized in the world, including Nigeria. “It is embedded with qualities that will lead to realization of the goals of ethical and socially responsible finance, as well as market-based finance. It is poised to achieve significant development results both at the micro and the macro levels. It is fast growing and there are many opportunities for innovation in the industry for both academics and entrepreneurs. It is an opportunity for modern times that needs to be snapped,” he concluded.

The lecture session was closed by Momoduo Musa Joof of Jaiz Takaful Insurance Plc who also shed light on why people should embrace insurance which is another cash cow for smart investors. Prof. Dawud Noibi gave the votes of thanks and thereafter, the invited guests had a taste of the organisers’ rich hospitality.