Nigeria needs to encourage more non-interest banking that will considerably reduce interest rate and open up access to Small and Medium Enterprises (SMEs) in order to drive national economic growth.
Speaking to BusinessDay at the 3rd edition of the Africa Islamic Finance Forum, jointly organised by the Federal Ministry of Finance and the Islamic Corporation for the Development of the Private Sector (ICD), a member of the Islamic Development Bank Group; Muhammad Jibrin CEO of SunTrust Nigeria said non-interest banking will help ease the way of doing business for SME’s and local industries compared to the difficult conventional banking.
“Having access to finance is very vital for economic growth; non-interest banking aim is to support local industries especially sole proprietorship and SME’s especially those who cannot afford bank’s collateral,” Jibrin added.
“Sun trust bank, a fin-tech savvy bank will always have the product the people need to partner with them and will continue to explore more opportunities to stay relevant for our customers,” Jibrin said in an interview with BusinessDay.
At the two-day Forum which kicked off on Tuesday, Finance and economic experts agreed that non-interest finance, otherwise known as alternative finance or Islamic finance has the potential to drive financial inclusion and will help Nigeria to achieve even, and well spread growth by unearthing the wealth of all segments of the nation.
The Forum also created awareness among participants on the existence of various Islamic Finance Instruments which are ready to support government’s need for raising capital for large infrastructure projects and also, enhance individual and SMEs access to financial services.
The Federal Ministry of Finance said the Forum will serve as a networking platform for the business and finance communities, facilitate the forming of partnerships among businesses and provide a catalyst for business development in Nigeria in particular, and the African continent in general.
Minister of finance Kemi Adeosun who was represented by Aliyu Ahmed, director of International Economics Relations Department said the Ministry will continue to support ICD towards development of private sector in Nigeria.
“Nigeria is trying to diversify from oil to other sector, we advise ICD to take advantage of the huge opportunity in the power, rail, education, and health sector which will be complemented by government regulatory support.”
“The private sector is the largest employer of labour worldwide; Nigeria and other associated member countries must remain committed towards the reduction of unemployment and the eradication of poverty in Africa.”
Many experts in Islamic Finance presented key papers, including one entitled “Islamic Finance as a tool for Development and Growth and the interface between Public and Private Sectors” by Suleiman Abubakar, Executive Director, Finance and Strategy, Sterling Bank.
“Africa is one of the world’s largest untapped growth markets for Islamic economy and Islamic finance offers various instruments that are ready to support the governments’ need for raising capital for large infrastructure and enhance individual and SMEs access to financial services” Okan Altasli,Regional office director at ICD said at the event.
Some of the top decision-makers in the business and finance communities from Nigeria, Somalia, Cote D’Voire, Sudan, Kenya and other African countries have being engaging in extensive discussions on investment opportunities in key African markets during the two-day Forum .
Given Nigeria’s status as a leading member of the Islamic Development Bank, the drive for investment into Nigeria, and the important steps being taken towards economic recovery in Nigeria through the region; the timing of the conference provides a much-needed platform for opening Islamic finance to Nigeria’s business community.
Meanwhile SunTrust Bank and two others yesterday in Lagos signed a financing memorandum of understanding (MOU) with the Islamic Corporation for the Development of the Private Sector (ICD).
Speaking to the media immediately after the MOU signing ceremony, the SunTrust Chief Executive Officer said that the deal has provided for the bank another line of funds to support the growth of small and medium size enterprises. He explained that non-interest loans are more supportive to businesses as there are no pressures of accumulated interests.
According to him, the bank embraced Islamic banking as part of its portfolio in order to provide adequate support to the small and medium enterprises which are growth drivers in the economy. Profit and loss sharing which he said is a major pillar of Islamic banking allows businesses enough time to thrive instead of been strangulated with interest payment burden.
The Chief Executive Officer of SunTrust Bank, Muhammad Jibrin signed for the bank while Regional Officer Director, ICD, Mr. Okan Altasli signed on behalf of the Acting Chief Executive Officer & General manager, ICD, Mohammed Al Ammari. The signing agreement was witnessed by the Permanent Secretary, Ministry of Finance, Aliyu Ahmed who represented the Minister of Finance, Kemi Adeosun.
DIPO OLADEHINDE
