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Islamic banking and finance in Nigeria: issues, challenges and opportunities

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  • Aliyu, Shehu Usman Rano

Abstract

With increasing wave of popularity and successes of Islamic finance across the world, Nigeria aspires to be the hub of Islamic finance of Africa. The country, for instance, has an estimated population of over 170 million people, a strong banking industry and a highly receptive and agile capital market in the continent, its dream is about to become a reality. This is despite the strong appearance of South Africa and Kenya into the scene. Early this year, the Nigeria’s apex bank issued a license to Jaiz Bank Plc, to operate as a full-fledged non-interest financial institution (NIFI), while other conventional bank were allowed to open a non-interest banking window. Similarly, the Nigerian government intends to float its first sovereign sukuk before the end of this year. Accordingly, the Nigeria’s Stock Exchange (NSE) market has recently introduced as Islamic index – Lotus Islamic Index (LII) in line with global trends, to monitor performance of sharia’ah compliant assets. These developments, no doubt raised a number of critical issues, posed a number challenges to both operators, regulators and investors alike, as well as opened doors of opportunities for the country. This paper attempts to allay some of the thorny issues, proffers way out to some of the challenges and brings to fore some of the opportunities for the country.

Suggested Citation

  • Aliyu, Shehu Usman Rano, 2012. "Islamic banking and finance in Nigeria: issues, challenges and opportunities," MPRA Paper 42573, University Library of Munich, Germany, revised 05 Nov 2012.
    • Handle: RePEc:pra:mprapa:42573
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    File URL: https://mpra.ub.uni-muenchen.de/42573/1/MPRA_paper_42573.pdf
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    References listed on IDEAS

    as
    1. Aliyu, Shehu Usman Rano, 2011. "Reactions of stock market to monetary policy shocks during the global financial crisis: the Nigerian case," MPRA Paper 35581, University Library of Munich, Germany, revised 28 Dec 2011.
    2. Mirakhor, Abbas & Zaidi, Iqbal, 1988. "Stabilization and Growth in an Open Islamic Economy," MPRA Paper 56003, University Library of Munich, Germany.
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    Cited by:

    1. Muzammilu Yunusa & Nadhira Bint Nordin, 2015. "Religious Challenges of Islamic Banking in Nigeria," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 5(4), pages 46-66, April.
    2. Bashir Baba & Shafie Mohamed Zabri & Ahmed Kaseri Ramin, 2019. "Evaluating the Customer Satisfaction’s Effect on Murabahah and Mudarabah Financing in Islamic Banking," Traektoriâ Nauki = Path of Science, Altezoro, s.r.o. & Dialog, vol. 5(1), pages 2001-2022, January.

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    More about this item

    Keywords

    Islamic Banking and Finance; Capital market; Central Bank; Sukuk;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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