Islamic Finance principles cut across the three main religions in Nigeria

In this edition, Businessday Law Editor, THEODORA KIO-LAWSON, speaks with managing partner of Metropolitan law firm and Chair of the 2019 African International Conference on Islamic Finance (AICIF), UMMAHANI AMIN about her work as a finance lawyer/trainer/facilitator; her role in the 2019 AICIF and how Islamic finance promotes equity; fairness and justice across all religions. Amin, who also spoke about the revised investment guidelines for PFAS by PENCOM; non-interest financial institutions and convent ional bond investors demand; amongst other things, projects that in a few years, non-interest finance assets under management will be in the range of N2 trillion to N5 trillion depending on macroeconomic policies. EXCERPTS…

Q : Tell us about the Metropolitan law firm and how you delved into capacity building and training.

A: One of the objectives I had when starting my practice as a lawyer was to go into areas that are not quite common and one of them is Islamic finance. I felt there is a huge gap and a lot of opportunities in that space but Nigeria wasn’t prepared then so we started Islamic finance trainings, consultancy and then advocacy as part of our CSR in 2019.

Our resource was excellent and so our trainings were rated A+ in partnership with IFISA of South Africa and IFCUK so we focused on the trainings for four years and we thought it was ripe to start a conference too to meet up with the demands for Islamic finance in the ecosystem.

Q: What is your interest in Islamic finance and how did you begin to drive conversations around this?

A: During my Masters program in business and commercial law, one of the courses was Islamic contemporary issues and Islamic finance was one of the topics. That spurred my interest coupled with the fact that I come from a family who do not have a culture other than Islam. Islam is against interest and usury so I grew up knowing that you cannot take interest. It is forbidden. My mother has never seen the four walls of a bank so that in itself pushed me into Islamic finance to contribute my quota towards financial inclusion.

Q: Nigeria is a secular state and Islamic finance is a financial system that is based on adherence to Sharia or Islamic law. Why do you think citizens in general, would benefit from services, products and instruments that are based on compliance to sharia or Islamic law?

A: Yes, Nigeria is a secular state, but Islamic Finance is Abrahamic Finance as all the three (3) main Religions – Islam, Christianity and Judaism – have common objection to certain activities such as usury, pornography, alcohol etc., which they all term as what is harmful to the society. All the religions also promote equity, fairness and justice. Even though it is globally recognized as Islamic Finance, its principles cut across the three (3) main Religions in Nigeria.

Likewise, there are countries with minority Muslim population such as the UK with 5% as Muslims, Luxembourg, South Africa, Hong Kong all with less than 2% Muslim population but with many non-interest financial institutions or instruments being patronized by both Muslims and NonMuslims. Non-interest financial institutions in Nigeria are open to all irrespective of region or religion just like the Sukuk issued by FGN were invested by both Muslims and Non-muslims.

Q: In your opinion, how does the lack of non-interest financial services impede Nigeria’s economic growth and how progressive do you think the Nigerian economy would be with non-interest financial services?

A: Lack of non-interest financial services has affected economic and social activities of some regions (especially Northern States) in the country. Many refused to associate or transact financial transactions via interestbased financial institutions, which also limit their potential. EFINA conducted a survey and found the reason why many people decided to be financially excluded was due to lack of non-interest financial services. They decided to forego any benefit interest-based financial services can offer in

The role of a legal practitioner is very key in any Islamic finance transaction as it involves contracts that connect financiers with financees…. Without skills from legal practitioners and judges, the adjudication of dispute will be difficult, biased or wrongly handled. I can humbly say Islamic finance transactions cannot go on without lawyers

order to maintain their religious values. The Nigerian economy will experience tremendous growth if non-interest finance is embraced without bringing in sectional

Q: Indeed, we have seen Islamic finance provide alternatives for growth in infrastructural development in Nigeria, with the issuing of a 100 Billion Naira seven-year Sukuk by the federal government in 2017 amidst others which have followed. In your opinion, how much of such interventions (by way of Islamic financial services or instruments) are we likely to see in the nearest future?

A: The two Sukuks issued by FGN for the total sum of N200billion and that of Osun State for N11.4 billion is a tip of the iceberg. Many issuances are expected due to demand in the market. In February 2019, PENCOM has released revised investment guidelines for PFAS. In those guidelines, each PFA is mandated to operate a multi-fund portfolio, which includes non-interest funds, as interested contributors are expected to write to their PFAS to migrate their pension to Non-interest Fund.

Based on some surveys conducted by ICICE, 10% of the total assets under management (AUM) are expected to be transferred to Non- Interest Funds. Meaning, PFAS alone will require over N1 trillion worth of non-interest financial instruments. This is coupled with Non-interested financial institutions (NIFIS) and conventional bond investors demand. In a few years to come, Non-interest finance assets under management will be in the range of N2 trillion to N5 trillion depending on macroeconomic policies.

Q: There’s a lot of advocacy around Islamic finance and the need to enhance and aid financial inclusion among the Muslim population. With a significant portion of Nigeria’s population (Muslims and Non- Muslims) recorded as unbanked, what sort of succour does Shari‘a-compliant financial products and instruments provide for all?

A: it is globally accepted that Non-interest finance promotes financial inclusion due to religious values held by many Muslims as well as some financing contracts in non-interest, which promote joint venture and partnership. Non-interest instruments support productive economic activities. It has the ability to provide finance to anyone that has or holds religious or cultural objection to non-interest and non-alignment of risk that are intrinsic to most conventional transactions.

Q: Where do you see Islamic finance in Nigeria in another 10 years?

A: Malaysia, which is considered the global hub for Islamic Finance started with a single Islamic bank for 10 years before the second bank. Nigeria started Islamic Bank in 2011 with 1 standalone and 2 Windows. Within 8 years of operations, the industry is boasting of 2 standalone banks, 1 window bank, 4 Takaful operators, 5 Islamic Funds, 3 Sukuk issuance, 1 Islamic Equity Index and regulatory guidelines from all Regulators and Self-regulatory Organizations. With all these historical trends, in 10 years time, Nigerian Islamic Finance will attract cross border transactions and will be managing assets of about N10 trillion or more.

Q: This is the 4th of the AICIF conferences. Do you think the conversations and engagements at the conferences have had direct impact on policy changes with regards to Islamic finance?

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A: The Metropolitan Skills has been organising the African International Conference (AICIF) since 2013. The forth coming AICIF will be the 4th and as usual the invited Speakers and Panelists are highly experienced in the in the finance industry. Many of the Speakers are from different jurisdictions where Islamic Finance progresses. With their wealth of experience to be shared at the Conference, the Regulatory Agencies can be influenced to make policies that will propel the industry to exponential growth & development.

We also have a mix this year from the conventional space and highly experienced legal professionals. This year’s conference is significantly more advanced than the previous three because we have made it more innovative with the introduction of the deal room where there will be matchmaking

of the right project with the right capital. The Islamic Development Bank (ISDB) will be leading this session. We also have the fintech showcase , which will also showcase sharia compliant products with a price tag for the most innovative.

Q: What informed the theme of this year’s conference?

A: The infrastructural deficit in Africa coupled with high number of financially excluded influenced our choice of the 4th AICIF theme of Infrastructure financing, sustainability and the future of African Markets.

Africa needs to be aware of alternative finance instruments that are capable of attracting funds from both conventional and Shariah complaint investors as well as improving the socio-economic status of the populace.

Q: What is the structure of the 2019 conference programme – by way of sessions (plenary, breakout), social events and other conference activities?

A: For this year there will be 10 different sessions for two days.

For this year we will have two keynote speeches one by his Highness the Emir of Kano Muhammadu Sanusi Lamido Sanusi II who is the Godfather of Islamic Finance in Nigeria and the second keynote will be by Mr. Qussama Kaissi, the CEO of Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) of ISDB.

This year we will also have Hajara Adeola, the CEO of Lotus Capital, a renowned Islamic Finance expert in conversation with the Emir of Kano on the pertinent issues for opportunities and challenges for the growth of Islamic Finance.

As I mentioned earlier, we will also have the deal structuring session and the Fintech Showcase.

Q: how did you select the speakers and discussants at this year’s conference?

A: We have been very careful in the selection of our speakers. We have both local and international speakers that we head-hunted due to their experience, reputation and competence in a particular area of specialization in

Islamic finance. We have speakers from all the financial regulatory agencies with guidelines on Islamic finance. We have speakers from International lending agencies and the private sector

Q: What should delegates/participants expect at the 4th conference that will be different from the other conferences?

A: The forthcoming AICIF is packed with practical experience from experts from major Islamic finance hubs from around the globe. It will also give avenue for networking especially at the award ceremony where many awardees will be recognized and appreciated for their respective contributions to the industry.

Q: What informed your choice of Lagos as the location for this year’s conference?

A: all the last 3 conferences were done at the Transcorp Hilton Abuja. Many participants came from Lagos. Being the center of financial transactions and activities, we feel it will better to bring the conference to the doorstep of Lagos financial institutions. It is part of our experience that whenever we organize Islamic finance trainings in Lagos, the attendants far out numbered the participants in our trainings in Abuja

Q: How can legal practitioners across Nigeria leverage on the development of Islamic Finance in the country today in terms of practice?

A: The role of a legal practitioner is very key in any Islamic finance transaction because they are all basically contracts that connect financiers with financees.

Islamic Finance is still a budding sector, which is fast developing in Nigeria at a neck-breaking speed, compared to other jurisdictions. As with any mutual relationship, some aspects may go wrong and result in disputes. Without skills from legal practitioners and judges, the adjudication of dispute will be difficult, biased or wrongly handled. I can humbly say Islamic finance transactions cannot go on without lawyers so this conference is very key for lawyers and that’s why we have high-ranking legal practitioners involved.

In a few years to come, NonInterest finance assets under management will be in the range of N2 trillion to N5 trillion depending on macroeconomic policies