Weak and missing links of Islamic finance in Nigeria: a legal appraisal

This chapter explores legal and governance regime of Nigeria's Islamic finance industry and identifies inadequacies in matters of law and Shariah and possible risks emanating therefrom, with view to sustainability of the industry. The regime pertains to law, Shariah governance and enforcement in Islamic finance contracts, products and services. In connection to this, the research highlights legal and Shariah non-compliance risks from perspectives of laws applicable to Islamic finance and role of judiciary in resolving Islamic finance disputes and the challenge they pose to sustainability of Islamic finance in Nigeria. This is a qualitative research conducted through semi-structured interviews with experts to obtain information in addition to data from existing literature. Doctrinal technique and content analysis were employed in the discussion and analysis of the data. The research finds that there are provisions in conventional laws and regulations applicable to Islamic finance which are not so compatible with Shariah and impede the goal of Shariah governance. In the same token, the laws have seized courts that lack expertise in Islamic commercial jurisprudence of jurisdiction in Islamic finance and its Shariah matters. These are manifestation of weak and missing mechanisms needed to provide certainty of a governance system that legally safeguards Islamic finance, ensures its Shariah compliance and enforcement in transactions and resolution of disputes arising therefrom. These are important for sustainability of Islamic finance industry and realization of its economic objective in Nigeria.