Islamic banking and finance in Nigeria: issues, challenges and opportunities

With increasing wave of popularity and successes of Islamic finance across the world, Nigeria aspires to be the hub of Islamic finance of Africa. The country, for instance, has an estimated population of over 170 million people, a strong banking industry and a highly receptive and agile capital market in the continent, its dream is about to become a reality. This is despite the strong appearance of South Africa and Kenya into the scene. Early this year, the Nigeria’s apex bank issued a license to Jaiz Bank Plc, to operate as a full-fledged non-interest financial institution (NIFI), while other conventional bank were allowed to open a non-interest banking window. Similarly, the Nigerian government intends to float its first sovereign sukuk before the end of this year. Accordingly, the Nigeria’s Stock Exchange (NSE) market has recently introduced as Islamic index – Lotus Islamic Index (LII) in line with global trends, to monitor performance of sharia’ah compliant assets. These developments, no doubt raised a number of critical issues, posed a number challenges to both operators, regulators and investors alike, as well as opened doors of opportunities for the country. This paper attempts to allay some of the thorny issues, proffers way out to some of the challenges and brings to fore some of the opportunities for the country