NDIC, stakeholders lament constraints to Islamic financing

The Managing Director/Chief Executive, Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, alongside stakeholders in the Islamic financing sub-sector, have lamented the limited penetration and progress of non-interest financing in the country. Their concerns stemmed largely from emerging risks currently confronting Islamic banks as a result of underlying structural economic weaknesses, inflationary trends and depreciating currencies. Speaking at the opening of the Sustainable Islamic Finance in Nigeria conference in Abuja, Ibrahim, noted that the developments were particularly worrisome as they could potentially destabilise liquidity, raise non-performing financing and erode capital. He added that foreign currency risks further posed a significant concern for regulators and Islamic banks, stressing that there exist structural challenges around liquidity management and legal accommodation in terms of existence and mechanisms for dispute resolution. This was just as the Managing Director/Chief Executive, Jaiz Bank Plc, Mallam Hassan Usman, also told THISDAY that the absence of instruments for Islamic banks to invest or manage their liquidity as well as lack of a clear tax regime may have stifled the growth of the sector in recent years. However, quoting the Islamic Financial Services Board (IFSB) IFSB 2019 Stability Report, the NDIC boss said access to finance include; ignorance, lack of education, lack of trust, poverty, security challenges, high levels of informality in the economy and for Islamic banking- lack of awareness- all constitute issues that impede access to finance. However, he noted that since the introduction of non-interest banking in 2012, the country had witnessed the establishment of JAIZ bank, windows of Stanbic IBTC and Sterling and Islamic Micro-finance bank. But while he expressed regret over the closure of Stanbic IBTC Islamic banking window, he welcomed the recent establishment of TAJ Bank.