4th AICIF: Islamic Financing To Provide Financial Inclusion Not In Full Operation In Nigeria –Stakeholders

Prof. Aishath Muneeza, Chairperson Capital Market Shariah Advisory Council, Capital Market Development Authority, Maldives has said that 17% of the world’s population dealing with SMEs face the challenges of lack of access to finance and she believes that Islamic financing will provide a solution to financial inclusion.

Prof. Aishath Muneeza, made this statement Monday, during the second plenary session of  4^th African International Conference on Islamic Finance (AICIF), held in Lagos.

Speaking on the topic, “Islamic Finance as a tool for Financial Inclusion” Prof said that said “We do not separate Islamic finance with financial inclusion because it is part of Islamic finance”.

“Products like Takaful, Sharia Tech using AI to complement the laws of sharia advisors, making it less expensive compared to hiring a sharia advisor, and many other products were created in order to tackle the problem of financial inclusion.

On the solution to adopt, she said “there is a need for customization of products, as a product may work very well in one jurisdiction but may not fit in another. So products are designed based on the nature of the jurisdiction.

“Then the Integration of sharia-based products in technology. Smart Sukuk, blockchain-based Sukuk, and likes. “Finally, there needs to be significant progress towards Products that are more Sharia complain,” she stated.

Rahma Hersei- Partner and Head of Africa, Gateway LLP, Kenya, said that Nigeria is behind in the area of Islamic Finance. Stating that in her country, Kenya, there was a collaboration between the drivers of Islamic Finance and in the insurance industry, which was very successful. “If people see there is a benefit, they sign up for it.

“Technology, research has worked for them in Kenya, it can also work elsewhere,” Rahma Hersei said.

Reacting to a question on what Kenya has achieved in terms of statistics, said MPESA has been very successful in Kenya regarding financial inclusion for the Muslim community using mobile-based technology

Norfadelizan Abdul Rahman, Managing Director, TAJ Bank Ltd in Nigeria,while speaking on the topic said that  real Islamic banking is more of asset management and fund management where the risk flows back to the investor.

He said Banks cannot really serve the unbankable sector, but microfinance can so he advice banks to go into microfinance in order to address those at the grassroots.

He recommends that the operators of Islamic finance need to finance Micro Finance companies to allow it to reach those at the BoP and also get involved in certain parts of the capital market. Finally, he said banks need other vehicles to also assist in their effort of financial inclusion.

Mallam Hassan Usman, MD/CEO Jaiz bank Plc. Reacting to a question on how is Jaiz bank is facing the issue of financial inclusion, said that the bank’s operation has led to financial inclusion because they needed to create Products, services, and strategies to help tackle the problem of financial inclusion.

“We have to take risk on those who are excluded and so we are working with villagers on how to provide capital to them rather than thinking of taking deposits from them.

Why wouldn’t Jaiz and Sterling banks complete what they initiated in 2016 with the CBN to provide financing for some categories of people in the society,” Hassan said.

Dr. Basheer Oshodi, Group Head, Non-Interest Banking, Sterling Bank, said that the real impact of Islamic Finance which is poverty reduction is yet to be seen in Nigeria, but things are getting better.

“Sterling Bank has been able to set up a fund for those at the BoP, which is interest-free and will use digital model to deploy it,”  he said