Opinion: Embracing Islamic banking as a poverty alleviation tool

by Luqman Idris

sanusi-lamido

In the West, Islamic Finance and Structured products are two of the most successful financial market innovations of the last 30years for various reasons, the former alleviates poverty in low income nations while the later increases investors

Some articles written by leading practitioners in Nigeria criticised Sanusi Lamido for implementing Islamic Finance into the Nation’s Financial System.

In the West, Islamic Finance and Structured products are two of the most successful financial market innovations of the last 30years for various reasons, the former alleviates poverty in low income nations while the later increases investors (be it individual, nation or companies) return by using financial instruments as means of investment strategies.
Most Retail and Investment Banking systems operate mainly on Interest as their revenue stream (Difference between lending and deposit rates). With Islamic Banking (Retail, Investment, Commercial, Merchant etc), one could enjoy the benefits of interest-free finance on debt products such as loans, mortgages and many more instruments which in turn makes it easy for consumers, a contributing factor in the alleviation of proverty in under-developed countries – This is one of the objectives of most International Islamic Banks.I understand the challenge that comes with making it possible for people to let go of an old pattern that is unproductive in someway, perhaps if we welcome this innovation by changing the way we think, feel, behave or all three, we could all fight poverty in the Nation (Islamic Banking).

The criticism of the “interest-free banking system” stems from the fact that it originated from Islam, however if one ignores its religious stance, it is clear to see that this innovation is beneficial to societies. If we look to the US and UK, there are many multi-national banks that utilise the Islamic Banking system which subsequently benefits their respective countries one way or the other.

Nigeria is among the list of world poverty ridden countries, the time has come for people of Nigeria to widen their financial views and see the benefits these innovations bring to the economy rather than to see it as a way to make Nigeria an Islamic country and cause financial market distortion.

I must embrace the work of the CBN Governor (Sanusi Lamido) for integrating Islamic Finance into The Nigerian Financial System to eradicate poverty in my beloved country.

I am aware that this article would attract some criticism from some people, this is because of your fear of “Change”

—————————————Luqman Idris is a Risk Management professional with specialities in Spot and Capital Markets.

 

Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija.

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One comment

  1. Enemies of progress who doesn’t want nigeria economy to improve are against islamic banking in nigeria. They knew that poor people don’t have the collataral security to borrow money from non islamic banks. I thank the CBN governor- sanusi lamido sanusi.

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