IslamicFinance.de

In January 2012, the Central Bank of Nigeria granted Jaiz Bank an approval in principle to operate as a regional interest-free bank in northern Nigeria. As a result of that, Jaiz bank became the first and the only full-fledged Islamic banking in Nigeria. Islamic banking is based on the principles of profit and loss sharing.

According to Mr. Muhammed Nurul Islam, a manager at Jaiz bank, the bank offers what is called a mudaraba (profit- and loss-sharing deposit). And Jaiz bank does not finance any customer without a purpose; he explain further that the primary means of Islamic finance are based on trading, and the bank trading activities are Sharia-compliant investments with the money deposited by customers. The customers and Jaiz bank share the risks and profits between them.

A Chartered Accountant and Tax Administrator, Mr. Bicci Alli has said that the federal government as well as states cannot shun Islamic financial instruments whose market is valued at over $2.6 trillion, because it has the capability to bridge the infrastructure deficit in the country.
The federal government is presently looking for financial and legal advisers and trustee firms to organise its first Islamic bond in the domestic market, the Debt Management Office (DMO) said on Monday. Nigeria is working on a debut sovereign sukuk but has yet to determine the size of a potential deal. Issuance of a sovereign sukuk is part of a plan by Nigeria’s debt office to develop alternative sources of funding and to establish a benchmark curve.

The International Institute of Islamic Banking and Finance (IIIBF), Bayero University Kano, has said the Sovereign Sukuk bond to be issued by the federal government in 2017 could be the solution out of recession. Prof. Binta Tijjani, the director of the institute stated this yesterday when she led the management team of the institute on a courtesy call to Media Trust Limited in Abuja.
Recall that initially, the Debt Management Office (DMO) on behalf of the federal government was to issue a Sovereign Sukuk bond this year but shifted it to 2017. The Sukuk Islamic bond is structured in such a way as to generate returns to investors without infringing Islamic law that prohibits riba (interest).

The #Nigerian government’s move for sukuk has reached an advanced stage. As work continues on the process of the planned sovereign sukuk, the size of the possible deal has not been determined. The Debt Management Office (DMO) had opened its door for expression of interests from entities, including banks and issuing houses, needed in the process, with deadline for bids submission slated for January 9, 2017. This came a few days after the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, was elected Chairman of the International Islamic Liquidity Management Corporation (IILM). His mandates include the facilitation of effective cross-border liquidity management instruments. Meanwhile, the African Development Bank Group (AfDB) has approved the $250 million loan for the Federal Government for the development of a youth-oriented initiative called ENABLE Youth Nigeria. According to the bank, the scheme would contribute to job creation, food security and nutrition, rural income generation and improved livelihoods for youths.

Nigeria-based Jaiz International Bank has won three awards at the 6th Global Islamic Microfinance Forum (GIMF) organised by Centre of Islamic Banking and Economics in Nairobi, Kenya. The organisation and its associated institutions, Jaiz Charity and Development Foundation, Jaiz Takaful Insurance, Jaiz Zakat and Waqf Trust Fund won the awards. The awards are Lifetime Achievement Award bestowed on the Chairman of Jaiz Foundation, Alhaji Umar Abdul-Mutallab, CON; Best Corporate Social Responsibility Award to Ambassador Adamu Babangida Ibrahim, Director General/CEO, Jaiz Charity and Development Foundation and The Best Rising Islamic Microfinance Personality Award was awarded to the Managing Director of Jaiz Takaful Insurance, Mr. Momodou Musa Joof.

Standard Chartered's Islamic division is seeking banking licences in three African countries in order to offer its services to the population. According to the bank's head of Islamic banking, Mohammad Ali Allawalla, Standard Chartered Saadiq could enter at least one of three markets, Nigeria, Botswana and Zambia, as early as 2017. The bank is also in discussions about gaining an Islamic banking licence in Brunei in South East Asia. Standard Chartered Saadiq's core markets are Pakistan, Malaysia, Bahrain, United Arab Emirates, Indonesia and Bangladesh and in 2014 it entered the Kenyan market, its first move into Africa.

In #Nigeria the National Insurance Commission (NAICOM) will soon approve dedicated companies that will sell takaful and micro insurance products. The Commissioner for Insurance, Mohammed Kari, said that the products would ensure that everybody is carried along and actively participates in the financial sector in the country. He explained that since the release of the regulations of micro insurance and takaful, companies had opted to use the window opportunities for the products. The commissioner said that various proposals have been submitted regarding the approach to adopt and NAICOM would consider them and select the best that suits the Nigerian market.

Shareholders of Jaiz Bank unanimously voted for its shares to be listed and traded on the Nigerian Stock Exchange. The bank disclosed that this development will now open windows of opportunities for numerous individuals who desire to own shares in Jaiz Bank. Chairman of the Bank, Alhaji Umaru Abdul Mutallab, said the Bank’s authorized Share Capital has been sub-divided from 15, 000, 000, 000 Ordinary Shares of N1.00 each to N30, 000, 000, 000 Ordinary Shares of 50k each. Also speaking at the event, CEO Hassan Usman said once listed on the Nigerian Stock Exchange, existing shareholders can trade their shares while new investors can also invest by buying the shares.

#Nigerian experts on Islamic finance met in Sokoto to discuss economic solutions, expressing the opinion that Islamic financing principles are the only alternative to end the current recession. The conference was organized by the Department of Management Science of Usman Danfodiyo University, Sokoto and ran under the theme "Management of Nigerian economy: Issues and Perspective in Islam". Lead presenter Dr. Ahmadu Bello Dogarawa said applying Islamic principles in corporate governance would go a long way in addressing Nigeria’s challenges. In his keynote address, Governor Aminu Waziri Tambuwal said Islamic finance was no more peripheral to conventional finances as it was being operated in 75 countries, including western nations.

Some new Islamic Insurance Companies will soon commence operations in Nigeria, thus becoming the first set of fully-fledged Takaful Insurance companies in in the country. Five investors had submitted applications to the National Insurance Commission (NAICOM), but only three of them were given approval. The remaining two applications are still receiving attention from the insurance industry regulatory body. One of the three licensed Takaful insurers, Noor Takaful Insurance Company, is expected to officially start operations in November in Lagos. The two others can commence operation latest by next year.

Nigeria's central bank has set commercial banks' investment in Islamic bonds issued by state governments to 10% of the total amount on offer and fixed a maximum tenor of 10 years for the bonds. The central bank said it considered the need to issue the guidelines to enhance the quality of sukuk instruments and to grant liquidity status at its discount window as well as for banks' liquidity ratio. Nigeria is working out details for issuing a debut sovereign sukuk and also planning to sell Eurobond to raise $1 billion this year. The regulator assigned a weight of 20% for capital adequacy for banks' investment in sukuk and a weight of 50% for Islamic bonds that do not qualify as liquid assets.

According to The World Bank, less than 20% of Muslims use conventional banking worldwide, in spite of the ever growing number of Islamic financial products. The bank's Vice President and Treasurer, Arunma Oteh, said this in Washington during the World Bank High Level Seminar on Islamic Finance. Ms. Oteh said that the huge financial gap that exist in the Muslim world could not be bridged and the lack of trust of financial service providers was a reason for the disparity. She added that Islamic finance was a tool for achieving Sustainable Development Goals (SDGs) with Islamic investors applying the ethical and quantitative measures in their investment decisions.

The federal government has asked for the scaling up of Islamic Development Bank’s (IDB’s) concessional resource and increased overall financing to Nigeria and other African member countries of the bank. Speaking at the inauguration of the IDB Country Gateway Office (CGO) in Abuja, the Minister of Finance, Mrs. Kemi Adeosun, said there are immense opportunities in Nigeria. The minister pointed out that Nigeria requires far more resources to face the challenges and diversify its economy. She also urged the the IDB Group to help in the recently constituted Buhari Plan for the Revitalisation of the Northeast Region of Nigeria.

The Islamic Development Bank (IDB) Group formally opened its Nigeria Country Gateway Office in Abuja. The new office has the mission to focus its services on health, agriculture, infrastructure, small and medium-scale enterprise and regional integration. IDB President Ahmad Ali said the group’s presence in Nigeria would strengthen socio-economic, technical and commercial cooperation between the bank and member countries in Africa. He added that this was important with the completion of the last portion of Trans Saharan Road linking Algiers in North Africa and Lagos. The Minister of Finance, Kemi Adeosun urged the IDB to support Nigeria’s effort to reconstruct the North East part of Nigeria devastated by years of militancy by insurgent group, Boko Haram.

The Islamic Development Bank (IDB) has promised to continue its support for Jaiz Bank Nigeria given that that Jaiz bank now has a national licence. IDB president Ahmad Mohamed Ali assured officials that IDB as an institution will continue to assist the Jaiz Bank. Chairman of the Jaiz Bank, Alhaji Umar Mutallab said with Jaiz bank’s newly acquired national licence from the Central Bank of Nigeria, the bank will soon start rolling out services nationwide. IDB is a shareholder in the Jaiz bank.

#Nigeria Deposit Insurance Corporation (NDIC) has challenged the management of Jaiz Bank to strengthen its corporate governance to face the current economic challenges of the country. Umaru Ibrahim, managing director of NDIC, gave the advice to the newly appointed managing director of Jaiz Bank, Hassan Usman. Ibrahim advised the bank to step up its public enlightenment efforts in order to increase deposits' mobilisation. He also noted the bank's challenges in investing its excess liquidity due to the absence of Sharia compliant investment windows. He noted that while a lot of countries had tapped into the Sukuk investment window, Nigeria was still lagging behind in this respect.

The Central Bank of Nigeria (CBN) recently released a new categorization system for "Non-Interest Islamic Microfinance Banks" (NIMFBs). CBN organized NIMFBs into three categories: "Unit", "state" and "national". Unit NIMFBs must have a minimum capital of NGN 20 million (USD 71,000) and may open one branch location within the same municipality as the organization’s headquarters. State NIMFBs may operate in one state if they maintain minimum capital of NGN 200 million (USD 350,000). Institutions in this category may open multiple branches in the state within which their headquarters are registered. A national NIMFB is permitted to operate in any state or territory of Nigeria so long as it holds NGN 2 billion (USD 7 million) in capital.

The State of Osun in southwestern Nigeria raised a sukuk bond worth 10 billion naira ($62 mn) from the capital market to fund educational development. After the recent trend of Eurobond issuance by African countries, Osun’s offering was sowing the seeds for more African sukuk. Prior to Osun, only Gambia and Sudan had issued local-currency short-term domestic notes. Osun's Governor Rauf Aregbesola believes that the potential of Islamic finance can also attract investors from the Middle East. Osun State’s planned multi-billion naira sukuk fund for education represents Nigeria’s most ambitious attempt to promote Islamic finance.

The State of Osun in southwestern Nigeria raised a sukuk bond worth ten billion naira ($62 mn) from the capital market to fund educational development. After the recent trend of Eurobond issuance by African countries, Osun’s offering was sowing the seeds for more African sukuk. Prior to Osun, only Gambia and Sudan had issued local-currency short-term domestic notes. Osun's Governor Rauf Aregbesola believes that the potential of Islamic finance can also attract investors from the Middle East. Osun State’s planned multi-billion naira sukuk fund for education represents Nigeria’s most ambitious attempt to promote Islamic finance.

The Central Bank of Nigeria recently issued a national licence to Jaiz Bank. The bank commenced the first phase of its rollout with branches in Lagos, Port Harcourt, Ibadan and Ilorin and shortly will be present in all the states of the Federation. Jaiz Bank has recently concluded a Rights Issue, which raised its capital to N15 bn and the issue was oversubscribed by about 3%. According to Deputy Managing Director Mahe Abubakar the target is to raise the capital base of N25 bn before the end of the year. This will position the bank to compete efficiently in this highly competitive sub-sector of the economy. There are some people that misunderstand the concept of non-interest banking, but Jaiz Bank is open to all Nigerians, irrespective of their religions.