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Monday, December 31, 2012

A REVIEW OF IMPORTANT EVENTS IN THE ISLAMIC FINANCE INDUSTRY IN NIGERIA IN THE YEAR 2012


   Unlike the year 2011 that witnessed a lot of controversies on the issue of introduction of Islamic banking by the central bank of Nigeria (CBN), especially the licenses of Ja’iz bank, the year 2012 witnessed fewer controversies as regard the introduction of the novel scheme. We all remember how some Christian clergies roused against Islamic banking in the year 2011 calling on the national assembly to stop the move as they alleged it would lead to the Islamization of Nigeria. A lawyer from the southern part of the country rushed to court asking the judge to declare Islamic finance unconstitutional. The country’s main umbrella representing the nations Christian bodies, CAN, issued many press releases on the issue of Islamic banking, expressing their reservations on the introduction of the system. But, despite these controversial oppositions the process to introduce the Islamic banking system in the country witnessed some progress. At the beginning of the year the first fully pledge Islamic bank start operation in January of the year with three branches in Kano, Kaduna, and Abuja putting to history book the believe that the operation of a fully pledge Islamic Bank is not possible in a secular Nigeria. Later in the year in an effort to expand it operations across the country Ja’iz Bank sold its shares out in a private placement helping it to attain the minimum amount of capital required by the Central Bank for a bank to operate as a national bank with branches across the country.  Ja’iz has since joined efforts to finance important commercial dealings and projects across the country, especially in the real estate sector and retail businesses.

  Also during the year the Nigerian Stock Exchange (NSE) and Lotus capital (a fund management firm) entered into a joint agreement that led to the establishment of the first ever Islamic Index on the Nigerian stock exchange that has since made it debut operating along side the all shares index of the exchange. The establishment of the index has made it possible for those craving for ethical means of investing in and outside the country to invest their hard earned money. This move has further widening the number of investment channels available to those restricted by religious injunctions in their business and investment dealings. As at Friday 28th December 2012 the NSE LOTUS Index stood at 1,771.59 higher than NSE-30’s 1,324.44 but lower than the NSE all shares’ 27,866.51.  The number of financial institutions that shows interest in entering the Islamic finance industry in the country also witnessed an increase with interest been shown in areas such as insurance, micro financing, Islamic banking window, and fund management. Likewise interest from academic institutions on courses related to Islamic banking and finance has increased; the centre established at Bayero University Kano (BUK) the previous period to run Islamic Banking and finance courses and train Islamic Banking and finance professionals has already started its programs during the first half of the year with different postgraduate programs. The country’s deposit insurance body, the Nigerian deposit insurance corporation (NDIC) also organized training programs for its staffs towards equipping them with the knowledge of the field and on the possible challenges of insuring Islamic financial institutions. Next year we look forward to see whether the Central Bank will make its plan to introduce Sukuk bond into the Nigerian capital market a reality.

Friday, December 7, 2012

FINANCIAL JOURNALISM IN NIGERIAN NEWSPAPER INDUSTRY


   The word 'Journal' gave rise to journalism, 'capital' to capitalism, 'social' to socialism and so on and so forth. But, while capitalism and socialism denote a general movement or a system, Journalism refers to a career, a profession that according to its dictionary meaning connote ‘the work of collecting and writing news stories for newspapers, magazines, radio, television and indeed the internet. Though, most online reporters or writers prefer the name blogger, to mean that they maintain an online web journal accessible to everyone with internet access, or that they have more freedom to write what is on their minds, and the fact that they are not limited by the stringent rules and censorship that is found in both the print and electronic media. It also means that they are moving with the changing world, the era of globalisation that witnessed the rise of modern technology and herald the demise of less sophisticated technologies and systems. But, not every body welcome the century of 'citizen journalist' in particular and social media in general, many old journalists who practiced their trade in a period when the internet is no more than a means of sending and receiving messages see social media as threat to the profession of journalism as they knew it. One of such old school journalist is chief Olusegun Osoba, former governor of Ogun state as well as former managing Director of the defunct Daily Times, who sees the business of social media as “jungle practice”. In his speech during the national convention of the Nigerian institute of Journalism alumni association (NIJAA) in Abeokuta (Sunday 1st December), Osoba rises alarm over what he sees as the growth of social media who poses a threat to the practice of journalism. He observed that some of the practitioners of this internet journalism know nothing about journalism, and therefore, called on the authorities to censor them. But, the real threat to the practice of journalism are people with a mindset such as that of Osoba, because changes such as the one brought by information technology are inevitable, is either you go with it or you perished as many industries have seen. And, Osoba need to be reminded that you cannot censor the freedom of speech in the internet era, as regimes such as that of communist China and Mubarak’s Egypt have seen.


    Coming back to the central topic of this piece as announced in the title, financial journalism still lag behind general journalism that comprises aspects such as political reporting and current affairs. This to me can be attributed to the following factors, shallow grasp of financial literature in particular and economics in general on the part of the journalist, Mathematic-phobia (fear of numeracy), lack of interest on the part of Nigerian public on business and economic news due to poverty and low literacy, scarcity of standard economic and financial newspapers and magazines, poor training and coordination between major economic institutions in the country such as CBN, NDIC, SEC, NSE, economic departments of Nigerian universities and the financial reporters, lack of interest on the part of academicians and professionals economics on economic and financial journalism leaving the business in the hand of amateurs, and finally, media owners lack of interest to invest substantial money in the field. This goes contrary to what obtains in the developed countries where economic and financial journalism is as strong as general journalism competing with it in every aspect. The economic and financial literacy rate in those countries is higher than anything you will expect to get from a country like Nigeria making it easy for papers that cover finance to prosper. The fact that professional economists show much interest in financial journalism there, have contributed to their successes. One of the world best know weekly magazines The Economist of London that started publication from September 1843, has economics, business and finance as it  central themes. Other major international titles includes, Financial Times of London, Wall Street Journal, Business Week, Forbes Magazine, and Fortune. As Nigerian economy grow at higher rate, the complexity in the working of the different sectors of the economy is bound to increase making it difficult for reporters with poor Economic and Finance background to comprehend it well, thereby failing to report it properly. In order to avoid this problem there is urgent need for the recruitment of people with economic background as finance and business reporters. Second is the extensive training of the existing financial reporters on the working of more advance economies and complex financial engineering.


   An average Nigerian newspaper usually carries three to five pages of business and financial news, this will not allow for deeper analysis and wider coverage of the happenings in the business world. A lot of the coverage of the reports are limited to news of conferences, annual meetings, and press releases from corporate organisations including a table showing the transactions on the floor of the Nigerian stock exchange. But, what is most needed pertaining to expert analysis of business, economics and financial news is scanty, only seen occasionally and in most cases lack rigor and technical grasp of major findings from world renown economic journals. With the exception of such Nigerian daily newspapers as Businessday, which is a business and finance paper, most papers lack dedicated economic and finance columns with expert contributions. Hardly will you find a good economist, like a university professor being allocated a column where he makes regular contributions on economics and finance. On the part of the Nigerian academic economists there is this tendency to look at newspaper contributions as less than the minimum in his field, preferring to feed his ingenuity and vast knowledge to professional journals whose circulation is limited to the professionals in the field. But, professional economist contributing to newspapers and magazines is the norm rather than the exception in other parts of the world. Some of the world most renowned economists in the world with Nobel Prize to their credit are regular columnist in newspapers and magazines. Most prominent example here is the late Professor Paul Samuelson the first American and the second person in the world to win Nobel Prize, who maintains a regular column in Businessweek. Samuelson is a true financial journalist par excellence who contributed a lot to the development of the field apart from his globally recognized contributions to almost all the major areas of economics from econometrics, mathematical economics, macro and micro economics, to consumer theory. Paul Krugman, another Nobel laureate and Professor of economics at Princeton University, contributed a weekly column to the New York Times and monthly column for Fortune magazine.