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LequteMan
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Islamic Financing will help check corruption, forgery and other vices in governance if the culture is embraced by Nigerians says World Bank Group Head of Islamic Finance, Finance and Global Practice, Mr. Abayomi Alawode, in an interview with Vanguard.
He says Islamic Financing, if adopted in Nigeria, will use “asset backing where any sum of money you get is assigned to a particular investment and from day one, you identify the asset.
“If you go to an Islamic bank and say I want to buy a car and I need a car loan, they are not going to give you the money and then you go and buy a horse instead. What happens is that the Islamic bank will ask you what kind of car you want and the bank will buy and hand it over to you, you have no room to run away," he says.
"This asset backing also happens in business as well, where if you need money to expand your factory in terms of machinery, they will identify what you want to buy and be involved in buying those machines.
According to him, this will help develop the economy as it will focus on the successes of investments and business ventures.
"This happens also with the government, when issuing Sukuk Islamic bond. They have to identify which assets they want to buy with it. Every time you issue the Sukuk to raise money, you must specify what you are buying with it.
“A government can say we want to borrow money to build roads, if you use Islamic financing instruments, there is no way you can use that money for something else because the money is tied inextricably to the road construction.
This he believes can stop corruption amongst government officials in the country.
However, Islamic Financing faces several challenges in Nigeria, he says. "Anytime I talk to fellow Nigerians about Islamic banking, they still see it from a religious point of view, which is why the CBN could not call it Islamic banking, they call it non interest banking, so that sends you the signal that the word Islamic banking is loaded and the CBN took a step of shying away from that and they call it non interest banking.
“When people now see it from a religious point of view, in a country that historically has had tensions between Muslims and other religions, where today you have an Islamic insurgency in the North East of Nigeria, so it becomes really tricky for you to promote and aggressively develop Islamic banking, until people become aware of it that it is really not for muslims only and is not muslims trying to take over Nigeria or take over the Nigerian financial system.
#Nigeria #Vanguard #IslamicBanking
He says Islamic Financing, if adopted in Nigeria, will use “asset backing where any sum of money you get is assigned to a particular investment and from day one, you identify the asset.
“If you go to an Islamic bank and say I want to buy a car and I need a car loan, they are not going to give you the money and then you go and buy a horse instead. What happens is that the Islamic bank will ask you what kind of car you want and the bank will buy and hand it over to you, you have no room to run away," he says.
"This asset backing also happens in business as well, where if you need money to expand your factory in terms of machinery, they will identify what you want to buy and be involved in buying those machines.
According to him, this will help develop the economy as it will focus on the successes of investments and business ventures.
"This happens also with the government, when issuing Sukuk Islamic bond. They have to identify which assets they want to buy with it. Every time you issue the Sukuk to raise money, you must specify what you are buying with it.
“A government can say we want to borrow money to build roads, if you use Islamic financing instruments, there is no way you can use that money for something else because the money is tied inextricably to the road construction.
This he believes can stop corruption amongst government officials in the country.
However, Islamic Financing faces several challenges in Nigeria, he says. "Anytime I talk to fellow Nigerians about Islamic banking, they still see it from a religious point of view, which is why the CBN could not call it Islamic banking, they call it non interest banking, so that sends you the signal that the word Islamic banking is loaded and the CBN took a step of shying away from that and they call it non interest banking.
“When people now see it from a religious point of view, in a country that historically has had tensions between Muslims and other religions, where today you have an Islamic insurgency in the North East of Nigeria, so it becomes really tricky for you to promote and aggressively develop Islamic banking, until people become aware of it that it is really not for muslims only and is not muslims trying to take over Nigeria or take over the Nigerian financial system.
#Nigeria #Vanguard #IslamicBanking