MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Governor Mallam Sanusi Lamido Calls Islamic Finance “Dynamic and Competitive”

In a recent seminar aimed at promoting awareness of Islamic banking models, Central Bank of Nigeria (CBN) Governor Mallam Sanusi Lamido reportedly predicted that non-interest banking will make a major impact on the Nigerian economy. He was quoted as having said, “the Islamic financial system, on a global scale, has witnessed a progressive evolution over the last four decades to become a dynamic and competitive form of financial intermediation within the global financial system.” He did concede that non-interest banking in the country is faced with challenges including limited knowledge of accounting and auditing standards pertinent to Islamic financial practices and a lack of skills and technical capacity for regulating and supervising the products [1].

The introduction of non-interest financial services includes not only Islamic banking but also other financial services such as insurance and fund management. Some companies, such as Nigerian Insurance and Cornerstone Insurance, have already started offering takaful, an insurance product based on Islamic principles, whereby members contribute money into a pool to protect each other against risks. Earlier this year, CBN released new guidelines for non-interest banking as part of its efforts to provide alternative financial services in the country [2]. The guidelines include requirements for licensing, risk management, audit and accounting [3].

By Kristha Abores, Research Associate

About Central Bank of Nigeria (CBN):
The Central Bank of Nigeria (CBN) was established in 1958 as Nigeria’s central banking authority. As defined by the Act of Parliament that created CBN, its statutory mandates are as follows: “to issue legal tender currency; to maintain external reserves; to safeguard the international value of the legal tender currency; to promote monetary stability and a sound financial system in Nigeria; and to act as banker and financial adviser to the Federal Government.” As of July 2011, CBN reports total assets of NGN 8.37 trillion (the equivalent of USD 54 billion).

Sources and Additional Resources:
[1] Vanguard: “CBN to extend Islamic banking to other financial sectors”, http://www.vanguardngr.com/2011/09/cbn-to-extend-islamic-banking-to-othe

[2] Nigeria: Encouraging Business Growth Through Non-Interest Banking”, http://allafrica.com/stories/201110090027.html

[3] “Guidelines for the Regulation and Supervision of Institutions Offering Non-Interest Financial Services in Nigeria”,http://www.cenbank.org/out/2011/circulars/fpr/non-interest%20banking%20g…

“Niger Commits To Takaful Insurance”, http://www.thenigerianvoice.com/nvnews/55785/1/niger-commits-to-takaful-insurance.html

“Islamic banking,Takaful insurance solidify Sharia”, http://sweetcrudereports.com/2011/07/06/islamic-bankingtakaful-insurance-solidify-sharia/

MicroCapital.org article, October 4, 2011, “MICROCAPITAL BRIEF: Central Bank of Nigeria Approves New Capital Base Requirements for Microfinance Banks (MFBs), MFBs Await Capital Verification Results”, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-approves-new-capital-base-requirements-for-microfinance-banks-mfbs-mfbs-await-capital-verification-results/

MicroCapital.org article, September 7, 2011, “MICROCAPITAL BRIEF: Central Bank of Nigeria Issues Mobile Money Operating Licenses to Affiliate of Fortis Microfinance Bank, 10 Other Companies”, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-issues-mobile-money-operating-licenses-to-affiliate-of-fortis-microfinance-bank-10-other-companies/

MicroCapital.org article, June 28, 2011, “MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Looking to Set New Capital Base Requirements for Microfinance Banks (MFBs)”, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-cbn-looking-to-set-new-capital-base-requirements-for-microfinance-banks-mfbs/

MicroCapital.org article, October 1, 2010, “MICROCAPITAL BRIEF: Central Bank of Nigeria Revokes Licenses of 224 Microfinance Banks,” https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-revokes-licenses-of-224-microfinance-banks/

MicroCapital Universe Profile: Central Bank of Nigeria, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Nigeria+%28CBN%29

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

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