There has been uproar over the recently released circular on interest-free banking model in Nigeria.With experience in banking and an innovation enthusiast; I will like to share my opinion in reaction to the sensitivity shown and ignorance expressed by people over this subject, which is a huge success in other clime.
For a population like us, with over 68 million unbanked, with Kano and Katsina having the highest unbanked population of a total of 96% for each State, with significant part of that population having no formal education or where they are formally educated must take Islamic education alongside, how appropriate and timely to allow an interest –free banking which they can identify with. The necessity of attuning financial services to local cultures and needs was rightly captured by Accenture article on African Financial Services.
As a country with a pressing challenge of being competitive amongst comity of nations, we cannot allow primordial sentiments to becloud our sense of judgment and hence miss out in a growth opportunity like this. The retail banking market size is large enough with unmet demands for a product that caters for the Muslim faithful or anyone who does not want interest.
In addition, the employment opportunities that will come with it cannot be ignored, since a new crop of personnel will be trained and employed. Also, 65% of cash in circulation is outside banking, hence, we need a leader with an innovative disposition to get them in, Interest Free banking to the rescue.
Interest –free banking, with particular reference to Islamic banking is an innovation, it is attributed to the pioneering work of Ahmad El Najjar in Egypt in 1963. The success of that banking model in capturing those left out of the traditional banking system based on their faith makes it an ideal alternative not after the recent failures of Nigerian Microfinance banks in being far from their description.
This piece was sent by Bola, the custodian of Higher Education and Innovation blog.