IslamicFinance.de

Regarding its economic situation and the quest for a solution in Nigeria, Islamic Finance is believed to be able to redeem it because of the ethical and moral values within the Islamic banking system.
Alhaji Sulaimon Yusuf, who spoke at the Muslim Association of Nigeria 34th Triennial National Conference in Lagos, said that Islamic finance is playing an important role in promoting socially desirable investments, economic empowerment, employment opportunities and resuscitation of real sector of economy. Further he said: "We have confidence in the economic packages and policies of the present administration and feel that a lot more needs to be done to alleviate the suffering of the masses"

Tajudeen Yusuf, President at the Institute of Islamic Finance Professionals (IIFP), has advised parents to encourage their children to study Islamic finance. Yusuf gave the advice on Sunday at the 34th Triennial Conference of the Muslim Association of Nigeria (MAN). The theme of the national conference was "Path to National Economic Recovery, Growth and Development – The Islamic Perspective". According to Yusuf, Islamic Finance helps to redistribute wealth and reduce income inequality, as well as promotes inclusiveness through stakeholders participation. At the conference a new national executive was elected to run the affairs of the organization for the next three years. They include Alhaji Tajudeen Ojikutu (President), Dhikrullah Yagboyaju (Vice President), Ganiu Salawu (Secretary) and Nurat Adebayo (Public Relations Officer).

In this interview the Managing Director of Jaiz Bank, Hassan Usman, speaks about Islamic banking in Nigeria. One of the main challenges is the high operating cost of banks, but Jaiz Bank managed to grow to a national bank. Starting in 2012 with only three branches, the bank expanded to 30 branches all over the country. The Nigerian government recently issued a N100bn Sukuk bond and Jaiz Bank was part of the process from the inception. The proceeds of the Sukuk will be dedicated to building roads across the country. Sukuk can ensure that projects are managed properly and there is no diversion. In terms of profitability, Jaiz Bank made profit in 2015 and even in 2016 in spite of the difficulty witnessed in the economy. According to Usman, 2017 looks even better because the fundamentals have started to improve and so the bank's performance will follow the trend of improved fundamentals.

A joint initiative of the African Development Bank (AfDB) and the Islamic Development Bank (IsDB) will boost agriculture and enhance drought resilience in Nigeria, Somalia and Uganda. Stronger ties between the two banks will help ramp up agricultural production along important crop and livestock value chains. For example, in Nigeria the Plateau State Potato Value Chain Support Project of the AfDB and the planned IsDB’s Agro Pastoral Development Project in Kano State will promote higher household incomes through productive agro-pastoral activities. In Somalia, AfDB’s Say No To Famine project is providing emergency assistance support and facilitating drought resilience building through the restoration of community assets.

Acccording to Jaiz Bank CEO Hassan Usman, more West African countries and companies are likely to adopt Sukuk to finance infrastructural development and corporate growth plans. He said the envisaged passion for Sukuk issuance in the near future could make the non-interest capital market grow bigger and faster than its conventional counterpart. Nigeria recently issued its maiden sovereign Sukuk and successfully raised N105bn for its N100bn Sukuk, raising optimism on the depth of the market. Usman added that Islamic banking had a lot of potential due to the economic growth in many West African nations supported by improving fundamentals, growing domestic demand and stronger regional integration.

To confute speculations about the N100 billion Sukuk, the Nigerian government said the money was intact in the appropriate account opened for it at the Central Bank of Nigeria. The Minister of Finance, Kemi Adeosun, earlier said the fund will be used to finance the construction of 25 key road projects across the county’s six geo-political zones. She said each of the zones was to benefit about N16.67 billion for road projects in their respective domains. After a month no money has been disbursed to contractors to start the construction works, which fuelled speculation that the money may have been diverted by the government. Director of the Debt Management Office, Patience Oniha, said the Sukuk was not available to government for general spending purposes, but went directly into the account opened for it. Although she did not say the exact time the process for the disbursement will be completed, she assured that once the contractors fulfil the requirements, the disbursement of the money would commence.

Many West African countries and companies may fall back on Sukuk to finance infrastructural development and corporate growth plans. Managing Director of Jaiz Bank, Hassan Usman, said there could soon be a frenzy of the facility issuance in West Africa. Nigeria recently issued its maiden sovereign Sukuk. It successfully raised N105 billion for its N100 billion Sukuk. Usman added that with a population of about 329 million people, the emerging middle-class segment of the region is expected to boost demand for retail banking, takaful and Islamic funds. According to him, as the market for Islamic Finance develops in Nigeria, each segment of the market will provide potential career paths for young and middle-level professionals. He also noted it might take some time because the ecosystem is currently narrow with only one full-fledged bank, one window operation, one capital market operator and two Takaful operators.

The Emir of Kano, Muhammad Sanusi II, is expected to launch Kano branch of Jaiz Takaful Insurance on Monday 30th October, 2017. Jaiz Takaful's CEO Momodou Musa Joof said the company would tap Emir Sanusi’s royal blessing to improve on insurance penetration in Nigeria and Kano in particular. The ceremony which will partly feature parley between the top management officials of the Company and Kano business communities and associations, would have the Company’s Board Chairman, Dr. Umaru Abdul Mutalab as a special guest.

Nigeria’s government launched a 100-billion-naira debut sovereign sukuk on the domestic market. According to the Debt Management Office, the sukuk was oversubscribed by 5.8%. The bond is structured as a lease and guaranteed by the government of Nigeria. The seven-year Islamic bond fetched 105.87 billion naira in subscription from retail and institutional investors.

#Nigeria's Federal Government successfully concluded the issuance of N100billion sukuk on Friday, but the issuance has divided the country along religious lines. The Christian Association of Nigeria (CAN) described the issuance as a subtle attempt by the Federal Government to Islamise Nigeria. Therefore, the body called on the government to abrogate the laws and framework behind the sukuk. But in its reaction, the Nigerian Supreme Council for Islamic Affairs (NSCIA), accused CAN of Islamophobia. NSCIA then appealed to CAN to tread the path of honour and refrain from statements causing disaffection and promoting disharmony that may lead to conflict in the country. According to Dr. Benedict Nwafor of the University of Lagos, for Nigeria sukuk is an opportunity for raising funds without raising the nation’s debt profile. Nwafor is of view that sukuk certificates can transfer state-owned projects to sukuk holders in case of default. He added that the government has to sort out clearly the scenario for a default and needs to educate the public on the benefits of sukuk.

After the first tier commercial banks in Nigeria, Jaiz Bank was the most active stock on the exchange with volumes of 7,179,550 with a total value of N4,682,686.00. The increased activity is indicative of swinging sentiments in favour of the stock. But the stock has underperformed the All Share Index (ASI) in the last six months as it returned a negative 45% while the ASI returned 40%. Jaiz Bank managed to grow its Gross Income in the first half year ending June to N3.25 billion from N2.56 billion. Income from Finance Investment grew 19.82% to N2.95 billion from N2.46 billion while Sukuk leapt 198.3% to N293.35 million from N98.35 million. Abdulfatah Ahmed, the Kwara State governor highlighted there was a lot of scope for growth for the bank and Islamic banking in Nigeria. Hassan Usman, the bank’s managing director, said he was optimistic about the future of the bank and therefore urged everyone irrespective of their religious background to key into the model.

Jaiz Bank CEO Hassan Usman said that #Nigeria would become one of the countries to successfully offer Sovereign Sukuk in local currency. The Federal Government floated around N100bn and according to him, the offer was to last for five days. Hassan said these on the sidelines of Jaiz Bank’s Customers Forum in Ilorin, the Kwara State capital and also revealed that the institution’s capital base had reached N15bn. He said that Islamic finance worldwide was novel, being in existence for about 40 years compared to conventional banking, which had lasted for over 300 years.

In Lagos, the Debt Management Office started a national road show last week in preparation for the issuance of the much awaited N100bn non-interest bearing Sukuk bond.
The Office said in a statement, that the road show led by the Director-General, Ms Patience Oniha, would also be held in Kano, Kaduna and Port Harcourt. It said the team would be accompanied by its financial advisers, Lotus Capital Financial Services Ltd. and FBN Merchant Bank Plc.
The road show is to create awareness about the sovereign Sukuk and sensitise target investors about its features and benefits. The Office had announced its intention to issue a sovereign Sukuk in the domestic market as part of measures to fund the 2017 budget deficit.

In August 2017, the Central Bank of Nigeria (CBN) introduced two liquidity management instruments for non-interest financial institutions, a Funding for Liquidity Facility (FfLF) and Intra-day Facility (IDF). In a February 2017 report, the IMF mentioned the lack of such sharp liquidity instruments as a key risk to the financial systems of countries where there are Islamic banks. Therefore, the CBN’s recent move is a welcome development. More Nigerian banks would be wise to have Islamic banking windows, but they must be mindful of some potential pitfalls. Customers might be sceptical about whether the bank is truly able to separate its Islamic banking arm from its interest-earning entities. There is also the possibility of regulatory arbitrage, where the bank potentially transfers risk between the two arms, depending on which is favourable. The CBN seems well-geared to handle such potential abuses.

The Nigerian central bank is setting up two new financial instruments to provide liquidity support for non-interest financial institutions. The new regulatory measures are designed for the proliferation of sukuk and takaful. Among the banks in Nigeria, only Sterling Bank, Stanbic IBTC and Jaiz Bank offer Islamic services. Jaiz, the only fully-fledged Islamic lender on the list, opened its doors in 2012. The Nigerian central bank stipulated several conditions for offering Islamic finance in October. Non-interest lenders must have a liquidity problem to be able to access a new discount window, which will offer it at zero interest, though lenders must post collateral.

Nigeria’s central bank is setting up two financial instruments to provide liquidity support to boost Islamic banking. The central bank has been working to set regulatory ground rules for sukuk and takaful to try to emulate the success of the industry in Malaysia. Islamic banking services are currently offered by the Islamic window of Sterling Bank, Stanbic IBTC and Jaiz Bank, but Nigeria wants to increase the sector. The country is gradually opening up to Islamic finance to bring non-interest banking to over 80 million Muslims. In October the regulator granted liquidity status at its discount window for banks' investment in Islamic bonds issued by national governments, and for banks’ liquidity ratios. Nigeria launched a 100 billion naira ($318 million) debut sovereign sukuk in the local market in June to help develop alternative funding sources.

In #Nigeria about $300 billion (N108.75 trillion) is required to close the country's infrastructure gap. To close the gap, the Federal Government has turned to the Islamic Development Bank (IsDB). Some financial analysts are warning that this is capable of undermining the nation’s constitution and its secularity. While insisting on the need to defend Nigeria’s secularity, some of them pointed out that there are other viable options and numerous non-religious lending institutions Nigeria can turn to for help. For example, public affairs analyst, Barr Obiora Akabogu, said Nigeria could fall back on the Sovereign Wealth Fund (SWF) to raise cash. Nigeria’s pension fund, which stood at N6.02 trillion as at last November, is another viable option to build infrastructure. Others have recommended the Public-Private Partnership (PPP) model for designing, building, financing and operating new infrastructure.

Malam Hassan Usman, CEO of JAIZ Bank, perfected a partnership with Borno State government on the reconstruction of the state economy.
Usman said, that the fourth branch of JAIZ Bank had been opened in Nigerias Maiduguri about five years ago. And it has so far been getting the strong support of the state government since the branch was opened. So he was in Nigeria to explore the ways and means to reciprocate this kind gesture by the state government. His bank wants to help Governor Kashim Shettima in all his efforts to turn things around, especially now that peace and normalcy are gradually being restored in Maiduguri and the entire state.
JAIZ bank has launched a programme, which is being implemented since the beginning of the rainy season, to provide small-holder farmers with inputs. It is working with the coordinator as well as the private sector partner for the state to provide the seeds, fertilizer and other inputs to the partner. The idea of the state government is to start with 5,000 farmers, which it wants to empower at this initial phase of the programme.

#Nigeria's Jaiz Bank has grown its capital base in five years from the initial N5 billion to over N15 billion. The bank disclosed that it is growing at an annual rate of 30% which makes it one of the strong players in Nigeria’s banking industry. CEO Hassan Usman said the management of the Bank grew Deposit Base from Zero to over N60 billion, and Asset Base increased from zero% to N40 billion. He added that the bank plans to grow its network through opening of additional new branches across the country. Jaiz Bank currently has a staff of 500 and has concluded plans to open new branches in Jos, Nassarawa, and Minna, as well as additional branches in Lagos. Commenting on the plan by the Debt Management Office (DMO) to float Sukuk, Usman described the move as a welcome development which is expected to go a long way in boosting the operations of the bank.

The Nigeria Customs Service announced that only Jazz Bank was able participate in the first bidding of its e-auction exercise. Joseph Attah, the Customs National Public Relations Officer (PRO), said that Jazz Bank was the only one out of the 23 customs duty collecting banks that accessed the e-auction platform. The PRO said that all the 23 Customs duty collecting banks were carried along and the process was subjected to user acceptability test. Throughout the testing period, no bank indicated any problem with the platform. However, upon launch only Jaiz Bank was discovered to be ready and active on the platform. Attah noted that the first 48 hours bidding period produced 43 winners. Items uploaded were 130 vehicles, 43 people placed their bids and won vehicles.