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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 process for the creation of Jaiz bank gathered momentum 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 Islamic banks to take that long. But Jaiz bank is not the first institution proposed as Islamic Bank, before it there were many attempts, starting with WAPA (West African Pilgrimage Agency) of the colonial era. WAPA was established to cater for the financial arrangements of Muslim pilgrimage, a name that is still common in places like Kano. Others includes Habib Bank and numerous community and later micro finance Banks established for the same purpose. What make Jaiz bank unique is the scale of the project and the hope placed 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 shares in 2003, the Bank was able to raise the minimum requirement for establishment of commercial bank in Nigeria (as at then it was 2.5 billions Naira and the bank raised over 3 billions Naira). Immediately after that 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 the CBN directive little was heard about Jaiz, the few attempts made by its organizing management to raise the new minimum capital never see the light of the day. This included looking for foreign investors and other 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 non executive board members are known to have accumulated wealth they can use to invest in the bank. The board should not left any stone unturned, in order to ensure that the Islamic bank generated the required capital base. Another thing is the recruitment for professional hands to come and run the affairs of the bank. This should not be taken lightly because it is the same people that will command the bank and moved it in the desired direction so as to make the difference it is expected to make. Information and communication technology (like in the conventional banking) is a strategic factor as Jaiz bank can not attain the desire impacts across the country without massive investment in ICT. The bank should also collaborate and develop links with foreign Banks in the business, so as to benefit from their experiences. As an Islamic bank, the management of Jaiz should followed laid down procedures required of 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 about the controversies on the introduction of Islamic banking in Nigeria. Vested interests who out of their own agenda or ignorance have already started actions to ensure that Islamic Banking do not see the light of the day. Sanusi himself has to be careful because some of these anti Islamic banking moves are coming from his personal enemies who may not necessarily be anti Islamic banking, but doing that in order to prostrate any good work he want to achieve in order to settle old scores. Those opposed to Islamic Banking might be doing what they do because of Islamiphobia that becloud their faculties of reasoning. Wonder never end, in a world of knowledge and progress (when the Western world itself has become opened to Islamic banking) some people here in Nigeria want to play the religion card in order to put obstacles in the way of this genuine effort. At a time when the United States authorities have established special adviser on Islamic Banking, the United Kingdom, Japan, Singapore, India and Russia are lunching their own Islamic bond (Sukuk), the city of London is on the way 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 put forward by these groups, that Islamic bank will temper with the secularity of Nigeria is baseless 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 country to move forward. With the green light, I hope more non interest Islamic banks will come on-board including those from other religions.

Tuesday, June 28, 2011


     Of the varied forces that determine the fortune of an economy, foreign exchange determination can be categorized as having important significant. Hence, it classification under the major macroeconomic goals of any economy. Exchange rate determination, the price at which a country’s currency is exchange for that of others, is such a lofty goal that a government can lose its legitimacy because of this. Diplomatic uproar can result from disputes on how to determine it.  In the past, nations had gone to war over exchange rate related matters. That is why when nation like Nigeria has some questions to answer with regard to her foreign exchange policy, a serious regime will listen carefully. The major borne of contention in the diplomatic relation between the United States and China in the last one decade, was on what shall the price of China currency (Yuan) be in relation to it trading partners. Even though Naira is not an international currency, its determination shall be of concern to people residing in Nigeria and few outside that have business to do with the country. Some few weeks back, there was an uproar when the World Bank recommended to the Nigerian authorities to reconsider further devaluing the Naira. The bank recommendation was base on the fact that at it fixed rate Naira was not sustainable. But, 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 position at then, I also did not see any wrong in World Bank advising Nigeria CBN to consider devaluing the Naira. At that time our foreign reserve position look perilous, our main exports were in weak position and our interest rate was unfavorable. Sanusi’s CBN was only able to maintain the 151Naira to 1 Dollar at that time by continued depletion of our foreign exchange reserve. The events of the past few months have justified the World Bank stand, Naira has depreciated from around 151 to a Dollar to around 153 to Dollar. Though Sanusi main excuse was that devaluing the Naira would only worsen inflation, which he was trying to fight. But, a cautious depreciation of Naira (which Sanusi ended up doing) was the better thing to do.  In developing countries like Nigeria, no one wants to be caught towing the line of World Bank and IMF, the two major capitalist institutions in the world.  Hence, Sanusi's public rejection of the recommendation.

    The history of Nigeria 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 policy was anchored to that of United Kingdom ( the time of Nigerian Pound) where the currency moved up and down together with the Pound Sterling to the presence 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. As any student of Economics will tell you, determination of foreign exchange is one of the most complex areas of economics. It is not a tea party as some of our policy makers want us to believe. It is not something that can be carried out in vacuum, without considering the consequences of 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 every body agreed Sanusi has achieved is bringing some kind of stability into the banking industry. But for the other two assignments, inflation control and determination of realistic exchange rate, CBN governor can be said to have achieved little success. Despite CBN efforts to narrow the gap between the official exchange rate and what obtain in the parallel market, the gap seem to be increasing.  Any person who has attempted to purchase forex will tell you that the task is herculean. Whether you purchase Forex through official channel or the parallel market it is the same, as if the market was not free market. Behind the door, deals are still been carried out as if there is no market regulator. Though Banks illicit trade in the market has been curtailed by the apex bank, some other not necessarily official transactions are 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 checked is by further liberalization of the market to reflect existing realities. Though this shall be done in the most cautious manner possible, 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 was 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 banks' 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 modern 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 poverty 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-Sahara Afrinca. 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 all kind of notorious businesses is nothing but the result of poverty and decay in moral fabric. The average northerner as most southerners see him is not illiterate, because he can read and write at least 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 as a result ending up being stubbornly traditional and old modern.


The elite in the North has remained the main cause of Northern current predicament. Due to among other factors deliberate denying of the region's people education, neglect of agriculture and abandonment of the manufacturing sector. Their greed and ungodliness have blinded them from seeing signs of cracks on the wall that bind the region together. Islam, the religion of the majority of the North's people has in no any place in its doctrine encourage staying in poverty. In fact, Islam has linked poverty to disbelief. The history of Islam is that of trade and entrepreneurship. 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 banking consolidation exercise does not help matters for the Northern poverty either. Empowering banks to give loan to large multinational corporations at the expense of the ordinary peasants, has done nothing to reduce poverty instead it strengthens 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 a long way in reducing poverty in the north if adopted. The micro-credit institutions in BANGALADESH is a good example. Do not forget that we all have our respective problems, the north has poverty in excess, while the south has criminals, kidnappers 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 doing any good to the image of the country, because it is shameful and disgrace to Nigeria. You only need to go to countries like South Africa, Italy, Spain and Malaysia to understand well what i mean. None of us should forget the number of times the African-Americans have distanced themselves from Africa. Mostly because of Nigerians and the bad reputation they caused to Africans around the world. I will conclude by advising the federal government to declare poverty in the North, as well as human trafficking to Italy and crimes like YAHOO-YAHOO (internet fraud) as national emergencies. In addition to the Niger delta issue that refused to go.