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Thursday, June 30, 2011


The name Jaiz has become synonyms with non interest banking in Nigeria, starting from 2002 when the movement for the creation of Jaiz gathered momentous to the past few weeks when the Central Bank of Nigeria finally gave the management of the Bank the go ahead to commence operation, it has taken nearly a decade to establish the bank making it one of the few to take that long. But Jaiz is not the first institution that was proposed as Islamic Bank before it there were many attempts, starting with WAPA (West African Pilgrimage Agency) of the colonial era. That was established to cater for the financial arrangements of Muslim pilgrimage, a name that is still common in places like Kano; to Habib Bank and numerous community and later micro finance Banks established for the same purpose. What make Jaiz unique is the scale of the project and the hope that is place on the institution by millions of people among them ordinary investors who put their hard earn savings in the institution. At the end of the first public offering of the bank in 2003 when the Bank was able to raised the minimum requirement for the establishment of commercial bank in Nigeria (then it was 2.5 billions and the bank raised over 3 billions) there were jubilations across the wide and breadth of this nation, particularly by people who share in the dream of it founders. That jubilation was cut short when the new CBN governor Charles Soludo came with his controversial baking sector consolidation that required banks to increase their minimum capital from 2.5 Billion to 25 Billion Naira.
        Since that CBN directive little was heard about Jaiz, the few moves made by it organizers to raise the new minimum capital never see the light of the day, this included looking for foreign investors and multilateral corporations to come and invest in the Bank. Now with the new green light, what necessary actions and directives should the management of Jaiz take in order not to waste this opportunity; some of its board members are known to have accumulated a lot of wealth that they can use part of it to invest in the bank, this very board should not left any stone unturned in order to ensure that this Islamic bank generated the new required capital base. Another thing is the recruitment of professional hands to come and run the affairs of the bank, this should not be taken lightly because it is these people that will command the bank in the desired direction in order to make the difference it is expected to make. Information and communication technology like in the conventional banking is also a strategic factor as Jaiz can never attain it desire impact across the country without making massive investment in this sector. The bank should also develop the desired collaboration and links with foreign Banks who have been in the business for quite long, so as to benefit from their experiences. As an Islamic bank the management of Jaiz should make sure that they followed the laid down procedure required for any Islamic Bank, this include among others not dealing in any interest related transactions and avoidance of speculative activities and gambling.  
        In the final note, the last may not be heard concerning the controversy on the introduction of Islamic banking into Nigeria. Some vested interest who out of their own agenda or ignorance have already started moves to ensure that Islamic Banking do not see the light of the day. Sanusi Lamido himself have to watch out because some of these moves are coming from his personal enemies who may not necessarily be anti Islamic banking, but to prostrate any good work that he wanted to achieved in order to settle previous scores. But some among these groups oppose to Islamic Banking are doing so because of Islamiphobia that continue to becloud their faculty of reasoning. Wonder never end, in a world of knowledge and progress when the western world itself has for long accepted Islamic banking as their own, some people in Nigeria still want to play the religious card in order to put obstacles in the way of this genuine movement. At a time when the United States authorities have special adviser on Islamic Banking, the United Kingdom, Japan, Singapore, India and Russia are lunching their own Islamic bond (Sukuk), while the city of London is on the road to become the third biggest global center for Islamic finance, we are here in Nigeria debating the benefit or other wise of Islamic banking. The argument been put forward by those behind these moves that Islamic bank will temper with the secularity of Nigeria will not hold water because countries like Russia, United States, UK and Turkey that embrace the same Islamic finance are more secular than Nigeria. My prayer is that those oppose to Islamic banking shall come to see the wisdom and benefits behind the introduction of Islamic Banking and put aside sentiment, personal grudges and religious differences, in order for our beloved country to move forward. With this new green light, I hope more non interest banks will come upstream include those from other religious background.

Tuesday, June 28, 2011


Of the many forces that determine the fortune of a particular economy, foreign exchange is of the few that can be categorized as having almighty significant, hence it classification under macroeconomic goals of any economy. Exchange rate, the price at which a country’s currency is exchange for that of others, is such a lofty goal that a government can lost its legitimacy because of it; diplomatic uproar can result from it determination, and in some instances the past, nation had gone to war. That is why when a big nation like Nigeria has some questions to answer with regard to her foreign exchange policy a serious government will listen carefully. If this question is to be asked what is the major borne of contention in diplomatic relation between the United States and China in the last one decade, with no rise of an eye brow the answer is what should the price of China currency be in relation to that of it trading partners? Even though Naira is not that significant as international currency, its determination should (at least) be of concern to people that are residing within Nigeria and few others that have something to do with the country.
    Some few weeks back there was an uproar when the World Bank recommend to the Nigerian authorities to reconsider further devaluing the Naira, because at it present rate it was not sustainable, many Nigerians condemn the world Bank and upheld Sanusi for saying that he would not devalue the Naira. But even though I was not entirely against Sanusi stand at that time, I also did not see any wrong in World Bank advising Nigeria’s CBN to consider devaluing the Naira. At that time our foreign reserve position look perilous, our main exports in weak position and our interest rate remain as unfavorable as ever it was. Sanusi’s CBN was only able to maintain the 151Naira to 1 Dollar at that time by continue depletion of our foreign exchange reserve. But the events of the past few months have justify the World Bank stand, Naira has depreciated from around 151 to a Dollar to around 153 to Dollar. Though Sanusi main defense was that devaluing the Naira will only worsen inflation, which he was trying to fight at that time; cautious depreciation of Naira (which Sanusi end up doing) was the better thing to do.  In developing countries and Nigeria is not an exception, no one wants to be caught towing the line of World Bank and IMF, the two major capitalist institutions in the world, hence the Sanusi public rejection of the recommendation.
    The history of Nigeria’s foreign exchange management is a record of upswing, policy somersault, and absent of clear road map to steer the Naira in the turbulent sea that happened to contain far bigger sharks and predators.  Starting from the time of independence when the policy was anchored to that of United Kingdom ( the time of Nigeria’s Pound) where the currency moved up and down together with the Pound Sterling to the present when we operate a kind of manage float, we are yet to have a realistic foreign exchange regime. Most of our foreign exchange options are nothing more than ‘I hope things will return to normality’ that nations around the world put forward when they don’t have something better on their plan. As any student of Economics will admit, determination of foreign exchange is one of the most complex areas of economics, not a tea party as some of our policy makers want us to belief. It is not something that can be carried out in vacuum, without considering the consequences of that action on other areas of the economy. For example, what happens to inflation, interest rate, employment, and production as a result of towing the wrong exchange determination path?
         Since the appointment of Sanusi as the CBN governor in 2009, one thing that every body agrees Sanusi has achieved is bringing some kind of stability into the banking industry. But the other two areas of his job, inflation control and determination of realistic exchange rate, the CBN governor can be said to have achieved minimal success. Despite the CBN many efforts to narrow the gap between the official exchange rate and what obtain in the parallel market the gap seem to be increasing.  As any person who has attempted to purchase foreign exchange will tell you the task is very herculean, whether you are purchasing through official channel or the parallel market; is as if the market is not free market at all. Behind the door deals are still been carried out as if there is no any regulator in the market. Though Banks illicit trade in the market has been curtail by the apex bank, some other not necessarily official transactions are still going on. We are all aware of the last few years when banks forget their official duties in favor of making quick profit made possible by illicit trade in Dollars and Pounds. To me the only realistic way that all these abuses will be check is by further liberalization of the market to reflect the existing realities. Though this should be done in the most cautious manner possible, in order to avoid the repercussions of hasty liberalization of foreign exchange markets.

Friday, June 3, 2011


Soludo[the controversial professor of economics from UNN now cbn governor]
remark that there is excess of poverty in the north is now a national debate of far reaching impact.This is very good and is what is expected of every A- class professor,to originate a national debate on topic of importance like northern poverty.The IMF-WORLD bank economic policies of beggar your neighbour he has been implementing over the years is another worthwhile achievement;thank you brilliant soludo.
  Some of the remarks made by soludo are actually true.For example,his remark that
''if 21st century is knowledge base and only those with knowledge,sound education
and skills will progress and develop,then the north has its work cut out,''is real,the north with it poor education will not go anywhere in a mordern capitalist
Nigeria,where the norm is survival of the fittest.
 But his assertion that the level of poverty in the north is dragging back the
development of the other parts of the country is not true.There is massive
porverty in other parts of INDIA,but that does not stop BANGALORE and MUMBAI
from becoming what they are today.This is a challenge to Soludo's ONITSA and
ABA where insecurity is the order of the day.
  Soludo's poverty is not synonymous with only north, but Nigeria and the
whole of SUB-SAHARAN Africa.The annual data released by UNDP can testify to
this.The mass exodus of Nigerians of southern origin from this country to
Western Europe,America and now South east Asia to engage in notorious
businesses is nothing but poverty and decay in morality.
 The average northerner as most southerners see him is not illeterate,because
he can read and write atleast in AJAMI.The problem of the northerner and by extension the north is that of people and region caught between westernization and Islam,not adhering to any one of them end up been stubbornly tradional and old mordern.
 The elite in the north has continue to remain the main cause of the north predicament,by among other things deliberately denying the region people
education,neglect agriculture and abondoned the manufacturing sector.Their
greed and ungodliness have blinded them from seeing the many bold signs on the
 Islam the religion of the majority of the north has in no place in it doctrine
encourage staying in poverty,infact,Islam has linked poverty to disbelief.
The history of Islam is that of trade and entreprenuership.Islam comes to
Asia and Sub-saharan Africa by means of trade.So the north has no excuse for
staying in poverty.
  But Soludo's consolidation excercise does not help matters for the northern
poverty either.Empowering banks to give loan to large multinational corporations
at the expense of the ordinary peasant do nothing to reduce poverty instead it strengthen the elite including the corrupt ones.On the other hand,his challenge to northern elite to open micro-finance banks in their respective villages is well time and will go along way in reducing poverty in the north if adopted.The micro-credit institutions in BANGALADESH is a good example.
  Do not for get that we all have our respective problems, the north has poverty in excess,while the south has criminals and other excesses in surplus.We must understand our differences to forge ahead.The same way the level of begging in
the north is not helping matters,large scale human trafficking, in the south,
to ITALY and other part of the world is not;because is a digrace to Nigeria.
You only need to go to countries like South Africa,Italy,Spain and Malaysia
to understand what i mean.
  None of us should forget the number of times the African-Americans have
distanced themselve from Africa,mostly because of Nigerian stigma.
 I will conclude by advicing the federal government to declare poverty in
the north,as well as human trafficking to Italy and crimes like YAHOO-YAHOOING as national emergencies, in addition to the Niger delta.
          Published in Daily Trust, August 2008 and also on Nigerianvillagesquare site