Thursday, September 8, 2011

Islamic finance spreads in Nigeria (because it works, charges no interest, and is often safter than western banking)



Home to some 70 million Muslims, Nigeria is stepping up efforts to capitalize on the growing popularity of the one of the world's fastest-growing financial sectors: Islamic banking.

Earlier this year the Central Bank of Nigeria announced a final set of regulations which introduced Islamic banking to the country.

CNN's Christian Purefoy discussed the sector's potential with Hajara Adeola, managing director of Lotus Capital, one of the groups helping to pave the way for Islamic finance in Nigeria.

Adeola says there is a growing appetite for this form of banking.

"It is working in Nigeria and there is a lot of interest in doing Islamic banking, in West Africa in particular," she says.

Spread across the Middle East and other parts of the world, a slew of Islamic financial institutions have been offering interest-free services that advocates say can provide a more sustainable alternative to conventional banking practices.

The industry, which exists in more than 50 countries, is estimated to be worth around $1 trillion and has the potential to eventually be worth $5 trillion, according to ratings agency Moody's.

Charging and paying interest is not allowed in Islamic finance because it is prohibited under Sharia law. Instead, if a bank is providing finance for an infrastructure project, for example, the bank and customer agree to share the risk of investment and divide any earnings. more