Islamic banking: Panacea to economic growth, says experts

Islamic banking system has been identified as a major contributing factor to the economic development of the country.

A Professor of Economics at the Usman Dan Fodio University, Sokoto, Prof Chika Aliyu said the introduction of Islamic banking in Nigeria will make cheap capital available for the people who have the entrepreneurship skill and expertise to engage in small scale businesses.

Under the system, the capital received from the bank, he said, would be interest-free and help people without job to start a business of their own.

Similarly, it would contribute to the reduction of inflation because the conventional banks are promoting inflation with the interest on the capital given to investors.

Prof Aliyu who spoke recently during the 5th Da’wah Workshop organised by the Lekki Muslim Ummah, LEMU at the Lekki Central Mosque auditorium encouraged people to learn more about Islamic banking and interest-free banking.

The economist said non-interest banking is an arrangement which is based on financing without interest and it is not necessarily Islamic. 

“Not all interest free banking is Islamic banking but Islamic banking must be interest free and it must comply with Shariah principles,” he said.

 He said Islamic banking does not only operate with the removal of interest from the transaction but also has some Islamic precepts and values to comply with. Such values include; honesty, integrity, benevolence, kindness and charity. 

In his lecture on Ethical Financing and Sustainable Economy, the Islamic alternative, Head of Investment, Management and Research at Lotus Capital, Taofiq Agbaje said Islamic banking is required in Nigeria for the purpose of bringing people who have never had any dealings in the financial sector. 

Agbaje said the system has helped significantly in infrastructural development such as good roads, rail system, and electricity, among others.

He stressed that, countries like United Kingdom and Germany which have small Muslim population have adopted this style of banking as an alternative and they have used it to develop their economics. 

“In developed nations, those who have enjoyed the bank mostly are non-Muslims,” Agbaje said.

He explained that the system allows banks and their customers share profits and losses together.

“There is the need to bring into the knowledge of people that this is only an alternative,” he said.

(The Nation, 17 Aug 1011)