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Religiosity and threshold effect in social and financial performance of microfinance institutions
Mohammad Ashraful Mobin
Islamic Micro-finance in NigeriaIssues and Prospect
Salaudeen Jubril Abdullahi
Outline
• Nigeria in brief• Microfinance in Nigeria• Efforts at Micro-Financing• Islamic Microfinance• Issues with Islamic microfinancing• Opportunities in Islamic Microfinancing
Nigeria
• Population: 173.6 million (2013)• Area: total: 923,768 sq km land: 910,768 sq km water: 13,000 sq km• Currency: Naira• GDP: $492.986 billion (nominal; 2015)
$1,105.343 Billion (PPP; 2015)Official Language: English and French
Micro-Financing in Nigeria
• Perceived deficiencies in the existing financing schemes for the poor and small businesses.
• Existing community banks and NGO microfinance licenced by CBN for operations in 2007
• Over 40% of the licenced MFB have failed• Frowning at interest on loans due to religious• Withdrawal of 224 microfinance banks license in
2010
Efforts of the past• Financial dualism: Poverty and Unemployment • Rural banking scheme, • Peoples Bank,• Operation feed the nation (OFN),• Green revolution, • Nigerian Bank of Commerce and Industry (NBCI), • Nigerian Agricultural and Cooperative Bank, • Nigerian Economic Reconstruction Fund (NERFUND), • Nigerian Directorate of Employment (NDE),• Family Economic Advancement Programme (FEAP),• Poverty Alleviation Programme (PAP), • Nigerian Industrial Development Bank (NIDB)• Bank of Industry (BOI), • Nigerian Agricultural Cooperative and Rural Development Bank (NACRDB),• Community banking and • Microfinance banking
Islamic micro-finance in Nigeria
• The CBN sent out an Exposure Guidelines on the Regulation and Supervision of Non Interest (Islamic) Microfinance Banks in Nigeria May, 2016
• We have a few groups who have piloted and they are quite encouraging
• Muslims are focused in Food production and there are small farm holders which is a ready market
Issues with Islamic Micro Finance
• Lack of basic infrastructure compounds the operational difficulties of these banks
• Lack of Skilled labour to operate and manage Islamic microfinance bank
• Poor banking culture in the rural areas and among the urban poor
• Lack of awareness and promotion for Islamic Finance by regulators and practitioners
Islamic Microfinance Prospects
• About 70% of the population engaged in the informal sector or agricultural production
• Government’s renewed interest and improved regulatory environment in the microfinance sub-sector
• Nigerian Muslims are looking forward to have Islamic Microfinance Institutions
Opportunities
• The new phase of licensing by the CBN• Training and Development opportunities• Opportunities for Takaful and Micro-Takaful• Opportunities for Islamic Venture Capitals• Opportunities for Investors who are looking at
green fields• Consulting opportunities• Infrastructure Development opportunities
Summary
• Islamic Micro-Financing has strong potentials in Nigeria
• There is a need for capacity development for Islamic Microfinance in Nigeria
• Education of the Mases is required• Regulation are being put in-place for ease of
operations• The timing for new entrance is now
THANK YOUSALAUDEEN JUBRIL
End of Presentation
AlHuda CIBE FZ LLE - U.A.EP: + 971 56 9286664, + 971 55 938 99 00
AlHuda Center of Islamic Banking & Economics - PakistanPh: (92-42) 35913096 - 98, Fax: (92-42) 35913056
Email: [email protected] Website: www.alhudacibe.com