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Monday, 19 January 2009

Nigeria: Huge Capital Base Hinders Growth Of Islamic Banking – Expert

A financial expert, Professor Monzer Kahf has blamed the failure to establish Islamic Banking in the country on the huge capital base introduced by the Central Bank of Nigeria (CBN) in 2004.

Speaking to financial correspondents in a recent break fast forum organised by Lotus Capital, the pioneer of ethical investment company in Nigeria, a consultant in Islamic banking, finance and economy, Professor Monzer Kahf said there is no regulatory hindrance to the establishment of Islamic banking in Nigeria but the major problem has been the apex bank’s new capitalisation benchmark for banks.

In his words, "there is no regulatory hindrance against the establishment of Islamic banking in Nigeria but the major problem is the CBN huge capital base."

Kahf posited that no investors would like to invest in such huge venture in a country like Nigeria, stressing that the nation's banks capital base should have been between the range of $25million and $50 million because the country is not very rich.

He explained that the Islamic banking which operate under ethical and moral value does not give out loans to investors to start up business, but it provides equipment and other requirement for transactions.

However, the representative from Securities and Exchange Commission, SEC, Mr I.B Bello, who was one of the panel discussants, maintained that Nigeria was ready for Islamic finance, saying the only challenge was lack of awareness.

He said that Lotus Capital which planned to raise N1 billion through its Halal fund realises N2.78 billion at the end of its public offering.

He reasoned that some christians who are interested in investing in stocks that have ethical and moral values should be given the opportunity do so.

Managing Director of Nigeria Pension Commission (PENCOM), Mr Mohammed Kabir Ahmed said that regulators needed to come together to see how to make descernible progress in the introduction of Islamic Banking in the country.

Meanwhile, he noted that the country lacked skilled professionals to work in that sector, stressing that for such institution to function effectively, the first step is for the country to develop its human capacity.

(Leadership Nigeria)

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