Shariah-compliant financing structures are the key selling point of non-interest finance in Nigeria. Mr. Abdulkabir Nasir, a certified Shari'ah Auditor and Advisor from the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), made this point while discussing the subject of "Strengthening Nigeria's Islamic Finance Industry through Enabling Laws."

He noted that setting up alternative frameworks like a 'Murabaha,' which entails a cost-plus transaction, whereby a non-interest bank will acquire a car and sell to a customer under specific rules and guidelines, is workable with a clear understanding between both parties.

The expert stressed that the regulatory environment has ensured products and services align with the industry's ethos. 

"For any non-interest finance product or service to be rolled out in the market. It must go through the vetting of the internal Shariah unit of the institution, and the advisory committee of experts, ACE in the Central Bank of Nigeria".

He added that if a product scales through the three-level vetting process and is falsely marketed as a shariah compliant,  it will be deemed 'tainted,' and the non-interest financial institution will be restricted from profiting from the gains. 

The non-interest bank will be required to channel the gains to a meritorious charitable course.  Speaking further on the concept, he described non-interest finance as a segment that is focused on what is permissible by Shari'ah provisions for financing. It connotes every form of finance that guarantees wealth protection and is ethical, with zero tolerance for issues like gambling in transactions. 

According to him, it is premised on the moral principles of Islam and prohibits illicit and unethical activities deemed impermissible. He stated that non-interest finance aligns with principles against investments in social vices and corrupt practices.

"There are set laws and regulations guiding the activities of non-interest finance which include the Banking and Other Financial Institution Act (BOFIA) and the Company and Allied Matters Act, CAMA, both of which were amended in 2020", he noted. 

The laws made provisions for specialized banking, which has been instrumental to the emergence of "Non-Interest Banking" in the country.  He acknowledged that the industry has evolved and is making progress with the existing regulations to deepen financial inclusion and improve banking services.

Regarding disputes, Abdulkabir Nasir highlighted the options of arbitration or mediation between a non-interest bank and a customer. He also pointed out that when the attempt to resolve the dispute fails, the court of competent jurisdiction will have to resolve the case with an assessor that understands non-interest banking.

He also called for specialized courts that can address non-interest finance disputes.  He was of the view that the removal of interest does not mean that non-interest finance cannot thrive in the economy. He believed non-interest financial institutions could structure ethical finance to support sectors like education and MSMEs in a win-win situation.

"Customers can engage with non-interest banks in the country. What is required is sincerity and transparency for these transactions to thrive".

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