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INTERVIEW: How Nigeria Can Spearhead Efforts to Use Islamic Finance Tools for SDGs in Africa – Usman, Jaiz Bank MD/CEO

…Says Jaiz Bank Open to Non-Muslim Customers

…As Bank Splashes N125m on Top 4 Teams Winners of Open-innovation Challenge

By JAMES EZEMA

Mr. Hassan Usman is the Managing Director/CEO of Jaiz Bank Plc. He is a 1985 graduate, with a first class degree in Accounting from Ahmadu Bello University, Zaria, Nigeria, and became an Associate Member of ICAN in 1989. He obtained a Post Graduate Diploma in Management in 1995 from Maastricht School of Management and a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN). 

HASSAN USMAN, Managing Director CEOMr. Hassan also attended the Oxford University Advanced Management Programme in 2002 and worked as the Financial Controller of Nigerian Development Company Limited, Kaduna until he joined NAL Merchant Bank Plc. where he served as the Financial Controller and Treasurer respectively between 1996 and 2001.

He had a brief stint with Inland Bank where he served as General Manager, Banking Services before re-joining NAL Bank as Deputy General Manager and Head, Business and Financial Advisory Group.

Mr. Usman joined Jaiz International in 2005 as a pioneer staff and was a key member of the team that led the process leading to the licensing of Jaiz Bank Plc in 2011. He served as General Manager – Business Development from January 2012 till April 2013 and was the Executive Director in charge of Operations and Information Technology prior to his appointment as the Managing Director/CEO in June 2016. 

In this interview with Abuja Business Reports, he spoke on Islamic Finance, what the banking is doing to promote grassroots development and some initiatives of the bank that align with the Sustainable Development Goals (SDGs), the role of Nigeria in spearheading efforts to explore Islamic Finance tools for the SDGS in Africa, among other issues. 

Excerpts: 

What is the concept of Islamic Finance all about? 

Islamic finance is based on a set of fundamental requirements as set by the principles of Islamic commercial jurisprudence; the most central being the prohibition of interest (Others include avoidance of speculation, zero financing of harmful products such as tobacco, asset-backing, prohibition of gambling and importantly profit and loss sharing). It seeks economic prosperity of the society and encourages sustainable development.

Generally, the main value propositions of Islamic finance were in its adherence to Sharia and subscribing to higher ethical values; promoting cross-border flow of funds; financial inclusion of the underserved segments of the community; more diversification of risks; unlocking the values of idle assets; job creation; and closer support to the real economy.

Jaiz Bank is seen by many Nigerians as a bank for Muslims, to what extent can non-Muslims patronise the bank? 

There is no prohibition against Non-Muslims to use Islamic finance products or own institutions offering Non-interest financial services. Some of the most popular conventional banking groups such as the Citigroup, HSBC, Standard chartered etc. demonstrated this by being among the largest institutions offering Islamic financial services in the world.

Furthermore, it’s worthy to note that prohibition against usury is not only imposed on Muslims but also other world religions such as Christianity, Judaism, Buddhism and Hinduism. The ethical parameters of Islamic investments that forbids certain sectors such as alcohol, gambling, phonography, etc. could similarly be subscribed by Non-Muslim investors as well.

In Nigeria, to a large degree we are actively creating awareness in communicating our business philosophy to the public which is to deliver world class sharia compliant financial services to our clientele irrespective of class, creed, race or religious belief, and to contribute to the socio-economic development of the society and there are evidences we are gradually succeeding.

As part of boosting local economic activities, are there special packages from the bank for small scale businesses aimed at helping start-ups and existing businesses grow? If there are, how can ordinary Nigerian entrepreneurs benefit in a financial market where access to facilities depends on availability of collateral? 

To promote grassroots development the bank provides some initiatives that aligned with the SDGs, they include the following:

  • The Jaiz Financial Inclusion Centre (JAFIC); a concept that integrates social investment into a micro credit architecture that is dedicated for women only.
  • Four Centres Established under a pilot
  • The concept addresses nine (9) of the seventeen (17) UN SDGs
  • 2,391 financially included (got bank account for the first time in their life)
  • Number of Women Entrepreneurs Financed = 2,239
  • Most of the women now able to save a dollar daily, from entire household surviving below $1/day
  • The Green Account; an account which keep track waste and recycling in addition to custody of depositors funds, it operates through 6 designated pilot collection centers in Federal capital Territory of Nigeria. The initiative is supported by UNDP and the Territory’s Environmental Protection Board (AEPB).
  • One Farmer One Hectare Initiative; A rice value-chain intervention which targets 15,000 smallholder farmers. Whereby Jaiz serves as link between the upstream (Production) and the downstream (Processing and Marketing) in a Value Chain 

Are there Islamic Finance tools in place to speed up the achievement of the SDGs and why is Islamic Finance a viable global option in that regard? 

 

The value proposition of Islamic Finance has always been in its impact and the relation to real economy, which is supposed to have a multiplier effect on economic growth and development. In essence Islamic finance tenets are totally in congruence with the overall aims and objectives of the SDGs, it will therefore strengthen the SDG initiatives rather than diminishes it.

The Bank is a signatory to the United Nations Environment Programme Finance Initiative -UNEP FI (Responsible Banking). Compliance with Responsible Banking and Nigerian Sustainable Banking Principles (NSBP) put the Bank in a top gear mode towards attainment of SDGs.

What role can Nigeria play in spearheading efforts to use Islamic Finance tools for the SDGS in Africa? 

The Federal Government of Nigeria (FGN) through the Debt Management Office (DMO) has been putting concerted efforts in stimulating the economy with Islamic Instrument (Sukuk).  Sukuk  Issuance  targeted at developing road infrastructure  so far sums up to N361.4Billion as at FYE 2019 coming from FGN and Osun State Government. These issuances impact on the SDGs 9 & 11; Industry, Innovation and Infrastructure; and Sustainable Cities and Communities.

In the same vein Nigeria has the ability to facilitate knowledge sharing within the continent and also extend its technical and capacity initiatives in the areas of Islamic finance to other African countries.

Is there any global roadmap for governments of various countries as they strive to put the SDGs at the heart of their economic growth efforts?

Countries have been keying into some of the leading UN initiatives, such as Principles for Responsible Investment, Principles for Responsible Banking and Principles for Sustainable Insurance that support financial institutions to align with the SDGs.

The COVID-19 pandemic has caused significant disruption to the global economy and financial markets, are there special aspect of Islamic Finance that Nigerians need to know about to enable citizens and governments at state and local levels take advantage of them in post-COVID-19 economic recovery?

Corona Virus Disease also known as COVID-19, is a pandemic that threatens to become one of the most difficult tests faced by humanity in modern history. As confirmed cases of COVID-19 spread, it has severed lives, overwhelmed health systems, and triggered lasting geopolitical change. The crisis pervades health, financial and social realms of the entire world.

Islamic Finance being predicated on making more social impact puts focal compass on Social Enterprises which are considered as the catalyst of economic growth in recent times. We continually develop and apply commercial strategies that will maximize improvements in financial, social and environmental well-being.

The Bank just concluded an open-innovation challenge where Top 4 Teams won N125Million. The Challenge was aimed to spur scientists, engineers, developers, inventors and social entrepreneurs to ideate, experiment and build products/solutions to help address the COVID-19 crisis in the country.

 

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