I really thought I would be able to avoid writing about this now-contentious and divisive policy about to, or already being implemented by the Central Bank of Nigeria. I have mostly kept my opinion to myself, or expressing them in private discussions and in a series of tweets I posted on Twitter with the hash tag #islamicbanking. But I realise I cannot run away from commenting about this forever. This is mainly due to the fact that a lot of tempers are rising, inciting words being said, facts twisted and rational reasoning is suffering as a result.
The first time I heard the term ‘Islamic banking’ was in mid-2009, though I cannot remember where. Out of curiosity, I checked it on Wikipedia, and I felt my knowledge base broadened.
Islamic banking is one of the branches of Islamic Finance, which also includes Islamic bonds (sukuk) and Islamic insurance (takaful). In Islamic banking, rather than loans being given on interest with a maturity period, loans are given without interest. Instead, the bank makes its money by sharing in the losses from the business venture, or loses it when the business loses money. Also, deposits in the bank do not get interest on it because the bank used it in business. The money is kept there solely for safe-keeping, which is usually the primary reason for the existence of banks. The primary reason for this is that the religion of Islam prohibits usury, which is gaining profit on money business, known in Arabic as riba.
I fell in love with this banking system, because unlike the conventional banking method, it saves the borrower of funds from trying to turn his business idea into profits, while at the same time paying off the bank loans with interest, which in Nigeria is cut-throat and expensive. Conventional banks do not care whether you are making money or not; you must pay back your loans within the allotted time or risk losing your collateral. However, in Islamic banking, you have a lot of breathing space since there is no interest rate. Hence, Islamic banks scrutinize loan applications more closely than conventional banks, since they do not want to lose their money. Also, they also act as sort of consultants to their borrowers. This should make this lending method more attractive to business persons looking for bank financing for their projects than the conventional method.
Now, this is one of the things I find lacking in the knowledge of critics of this noble idea. Very few of them have taken their time out to research about Islamic banking with a very open mind. There is a lot of knee-jerk, emotional-laden reaction to the decision of the CBN to license Islamic banks. The assumption, a very misinformed one, is that the CBN through its governor, Sanusi Lamido Sanusi, is attempting to Islamise Nigeria by introducing this banking system.
To start with, the idea to introduce Islamic banking was not a policy introduced by Sanusi, but by his immediate predecessor, Prof Chukwuma Soludo, a Christian. Sanusi is merely pushing for its implementation. I first heard of Jaiz International Bank in 2005, during the tenure of Soludo at the helm of the apex bank, when Sanusi was still an Executive Director in UBA, and definitely not part of the policy making at the CBN.
Secondly, the CBN in its strategy to diversify our banking industry by introducing specialisation, decided to allow for the formation of non-interest banks, alongside international banks, national banks, regional banks, mortgage banks and investment banks. Islamic banking is a merely a sub-set of non-interest banking. It is not entirely non-interest banking. Some people have reacted by saying that why should there be set of guidelines for only Islamic banking, and not for Christian banking. What CBN did was to release a set of guidelines for non-interest banking as a whole, and then a specific one for Islamic banks. Anyone familiar with Islam as a religion knows that there exists a process for Muslims in everything, including finance and even how to share inheritance of a dead relative. This is something we as Christians do not have, such specific instructions on how to handle finance. Instead, we have general verses that talk against cheating, or the love and worship of money, and so on.
Thirdly, the concept of religion being against usury is not peculiar to Islam alone, but also exists in the Bible. Let us see a few verses that talk about this:
“In you, they take bribes to shed blood, you take usury and increase, you have made profit from extortion from your neighbours, and have forgotten me’, says the Lord God” – Ezekiel 22:12
Take no interest or usury from him, but fear your God, that your brother may live with you” Leviticus 25:36
“One who gathers his possessions by usury and extortion gathers it for one who will the pity the poor” Proverbs 28:8
[All quotes are taken from the New King James Version, NKJV]
There are many other verses that talk against usury, even likening it to extortion, but I would just pick these three.
This is one reason that even the first banking houses in Europe were founded by Jews, who do not feel bound by these laws and admonitions. You will recall from Shakespeare’s work, The Merchant of Venice, in which Malvolio, the lender was a Jew and after he lost his trial in which he sought to collect his payment from his borrower in a pound of flesh, he was ordered by the judge to become a Christian and cease his money-lending business. This means that today’s banking is founded on Judaic principles, even if they do not declare it in its name. Why then are we Christians crying blue murder over what our own holy book agrees upon?
Fourthly, there is the spurious allegation that Islamic banking is part of a plan to Islamise Nigeria. This is what I cannot but marvel at how shallow this belief is. How can a banking system that is optional be used to make all of us Muslims? Would the CBN force all of us to operate accounts with Islamic banks? Unknown to many of us, a lot of commercial banks have been operating non-interest banking services based on Islamic financial principles. One example is BankPHB, a product of the merger of Habib Bank and Platinum Bank. Habib Bank Nigeria is an affiliate of Habib Islamic Bank of Pakistan. They have Islamic banking services available to their customers, despite being an international commercial bank. Yet, I know of many Christians who proudly bank with them. Has the presence of Islamic banking services converted them to Muslims? Absolutely not!!!!
Let me share with you a broadcast message I received on my Blackberry phone a recent morning:
“I have never known anything called tribalism. A very senior cleric in the church accused me of removing Christians from decision-making positions at the CBN. I became Governor in 2009, the time the term of the CBN Board of Directors expired. I recommended a board for reappointment to President Yar’adua. Out of the 11 members of the board, only 3 are Muslim. The Monetary Policy Committee of the CBN which I constituted has 7 members, only 1 is a Muslim. A Deputy Governor’s seat became open when I was Governor. Dr Kingsley Moghalu was in Geneva. I went and convinced him to come back to Nigeria and I convinced the President to appoint him. On our 5-member Committee of Governors (COG), 3 are Christians and the other 2 are Muslims. We have 24 Departmental Heads in CBN that I appointed, only 8 are Muslims. These are the people who took this decision on Islamic banking. The Director of Financial Policy and Regulation who signed and issued the regulations on Islamic banking is named Christian Chukwu. He reports to the Deputy Governor in charge of Financial Systems Stability, Dr Kingsley Moghalu. The report then comes to the COG of 5, 3 are Christians. It then goes to a board of 11, 8 are Christians. Then all these Christians must be bad if they are part of an attempt to Islamise Nigeria. I don’t want to engage people. I can discuss this on religious grounds. I can quote from Exodus, Deuteronomy and Leviticus. I have sources from St. Augustine, St. Ambrose and different popes from Pope Clement up to Pope Benedict XVI. I have quotes on Islamic banking. I can debate on religious grounds and prove to anybody based on the Bible. Infact, the Natural Council of Christianity at one time said that anybody who gives usury should not be buried in a Catholic cemetery. I can debate with anybody on the Bible and the teachings of Christ that usury is less consistent with Christian teachings – Sanusi Lamido Sanusi.”
This statement of Sanusi says it all. These are all verifiable facts. What more can I add?
I am not naïve to say that there doesn’t exist among us extremist Muslims who desire to foist their faith, culture and way of life on all of us, whether we are willing or not. But I know for sure that Islamic banking is not one of their methods.
Many other countries have Islamic banks, even those with very minority Muslim populations. South Africa (7% Muslim population), Kenya (30% Muslim population), Britain, Singapore, etc. all have Islamic banks. In fact, HSBC, one of the top banks on this planet operates an Islamic banking division. That has not made any of these countries Muslim countries. So also many of the top professionals globally in Islamic finance are Christians. A good example is Prof Peter Buckley, a Briton.
Some people have said that they are not against the banking system. Their grouse is with the name; that it should be left as non-interest banking. But then, I wonder, why does the name matter so much? Would it change what the system is based on? Let me make an analogy: apart from family, childhood friends and few close friends, no one else knows that the name on my birth certificate is Markus, which I later dropped the –us, and stuck with Mark. But does that change who I am, inside? Definitely not.
Some other people have alleged that Islamic banks would be used to fund Islamic extremist activities. I wonder why financiers of extremism would have to wait till they found a bank before they have the leeway to finance evil. The CBN has reassured us by making stringent guidelines for monitoring the cash flow of such banks in order to forestall its occurrence. In fact, Gov. Sanusi pointed out in a hearing before the House of Representatives that 60% of the shareholders of Jaiz International Bank, the first licensed Islamic bank, are Igbo Christians. Would they then take part in funding the activities of extremists who will definitely target members of their own faith? I would leave you to answer that.
I have also heard others criticise the fact that it is the CBN through Gov. Sanusi that is pushing for its implementation. But then, should not the Governor stand by and defend the policies and decisions his organisation takes? It is exactly the same method he used to defend his decision in 2009 to remove bank executives for their gross negligence, which was turned into a smear campaign against him on regional and ethnic grounds.
I sincerely believe in my heart that there is nothing wrong in Islamic banking, nor any sinister motive in its introduction in Nigeria. We have complained, and know for a fact that capital is unavailable to established companies, not to mention those desiring to start a business venture from the scratch. In places where there are available, the interest rates are so exorbitant. We should embrace this as another method to make capital more available, and cheap to obtain. Matter of fact, the banking crisis Sanusi encountered upon assumption of office in June 2009, and for which he had to use his discretionary powers as the Governor of the CBN to fire 9 bank CEOs and their teams and inject almost a trillion naira of public funds into them to prop them up lest they fall would have been avoided had it been they were operating on the principles of Islamic banking. This is because they would have scrutinized the loan applications better and would not have been lured by mere profits from interest rates.
In all fairness to CBN, they have really done their best to educate us about this banking system. However, sentiments have clouded our minds and have blinded us to the facts of the matter.
It is a pity that a brilliant economic tool has become the source of so much religious acrimony. It is my desire that we should seek to understand an issue fully and thoroughly before making an opinion about it. We should not give in to emotional reactions, but allow logical, rational reasoning take control. All our religious organisations should stand down on this war of words, most especially the Christian Association of Nigeria (CAN) for leading the opposition, and the Supreme Council for Sharia in Nigeria (SCSN) whose leader, Dr Datti Ahmed, said that Muslims would fight to the last of their blood to make sure Islamic banking takes off. These kinds of statements only worsen matters and fuel the flames of suspicion and misunderstanding from which the opposition to Islamic banking comes. Thank God the National Supreme Council of Islamic Affairs, which is the apex body for Islam in Nigeria, under the leadership of the Sultan of Sokoto, have come out to disown Dr Ahmed and his band of rabble-rousers.
I have said my own two cents about this controversial issue. I know I am going to get a lot of reactions about this, which I cannot control. But I just implore you to think through this before you take a stand on it. Facts are sacred, opinions are not. May our opinions be well-informed and devoid of hatred and bitterness.
May God help us all.
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