PI ONEERI NG I SLAMI C BANKI NG I N NI GERI A THE PROPOSED JAI Z - PowerPoint PPT Presentation

PI ONEERI NG I SLAMI C BANKI NG I N NI GERI A THE PROPOSED JAI Z BANK STORY BY M. MUSTAPHA BI NTUBE Jaiz International Plc Presentation 1 EFInA Innovation Forum

Outline Outline 1. Introduction to Islamic Banking 2. Opportunities for Islamic Banking in Nigeria 3. JAIZ’S Pioneering Role 4. Challenges of A Pioneer 5. Benefits of Islamic Banking 6. Conclusion Jaiz International Plc Presentation 2 EFInA Innovation Forum

1 Introduction to Islamic Banking Introduction to Islamic Banking Jaiz International Plc Presentation 3 EFInA Innovation Forum

Introduction to Islamic Banking Introduction to Islamic Banking Concept and Principles Qur’an Islamic Juristic M oral/ Banking & Interpre- Ethics tations Finance Although I.B. originates Hadith from Islamic religion, it has become a global practice open to all . Jaiz International Plc Presentation 4 EFInA Innovation Forum

Introduction to Islamic Banking Introduction to Islamic Banking Concept and Principles  Bible: “ Do not charge your brother money or food or anything else that may earn interest” Deuteronomy 23 verse 19 “ He who lends money without usury and does not accept bribe against the innocent shall never be shaken” Psalms 15 verse 5 Jaiz International Plc Presentation 5 EFInA Innovation Forum

Introduction to Islamic Banking Introduction to Islamic Banking Concept and Principles Jaiz International Plc Presentation 6 EFInA Innovation Forum

2 1 Opportunities for Islamic Opportunities for Islamic Banking in Nigeria Banking in Nigeria Jaiz International Plc Presentation 7 EFInA Innovation Forum

Opportunities for Islamic Banking in Nigeria Opportunities for Islamic Banking in Nigeria Rationale for Islamic Banking in Nigeria Restricted Increasing Disp Access to Credit Income FX Direct Large M uslim Investment Pop Rationale for Islamic Banking in Nigeria Increasing Global Innovation Acceptn Expanding Large Informal Cap M kt Sector Activities Jaiz International Plc Presentation 8 EFInA Innovation Forum

Opportunities for Islamic Banking in Nigeria Opportunities for Islamic Banking in Nigeria Analysis of Potential Demand (Cntd.)  Estimated Islamic Banking M arket Size is N4.35 trillion, representing 44% of total industry deposit liabilities (N9.9Trillion) as at Dec 2008.  Estimate is based on distribution of deposits in some leading Nigerian Banks (by KPM G).  Deposits are expected to grow at a CAGR of 25% for the next five years. Jaiz International Plc Presentation 9 EFInA Innovation Forum

JAIZ’S Pioneering Role 3 Jaiz International Plc Presentation 10 EFInA Innovation Forum

J AIZ’S Pioneering Role  Raised Required Cap. Of N2 b in 2003;  Applied for licence M arch 2004;  New Cap of N25 b introduced July 2004;  Back to the trenches:  Private Placement;  International Road Shows- Cap + Str. Partner;  Legal & Regulatory Framework;  Continuous awareness creation. Jaiz International Plc Presentation 11 EFInA Innovation Forum

J AIZ’S Pioneering Role  Key Issues to be addressed:  Complete Capital Raising;  Obtain final licence  Sign on Strategic/ Technical Partner;  Recruitment & Training;  Infrastructure acquisition  Promotion  Roll Out Jaiz International Plc Presentation 12 EFInA Innovation Forum

4 Challenges Challenges Jaiz International Plc Presentation 13 EFInA Innovation Forum

Challenges Of Estb. Islamic Banking in Nig  No Regulatory/ Supervisory Framework  Size of capital required  N25 billion set up by regulatory fiat  Serious barrier to entry  Sub-optimal utilization of capital  Weak KPIs – initial years Jaiz International Plc Presentation 14 EFInA Innovation Forum

Challenges Of Estb. Islamic Banking in Nig  Fiscal Issues  Nature of IB Products  Need for tax neutrality (FIRS/ M oF)  Lack of sufficient Political support  Lack of Liquidity M gt. Instruments  25% Liquidity Ratio  Interim measures required for IB Jaiz International Plc Presentation 15 EFInA Innovation Forum

Challenges Of Estb. Islamic Banking in Nig  Knowledge Gap  Trained manpower;  Lack of training facilities;  Lack of sufficient understanding of IB  Regulators  Operators  General Public  M isinformation / skewed understanding Jaiz International Plc Presentation 16 EFInA Innovation Forum

5 Benefits of Islamic Banking Benefits of Islamic Banking Jaiz International Plc Presentation 17 EFInA Innovation Forum

Benefits of Islamic Banking To Banking To the Society Access to Credit Diversification Emphasis on Socially Research and Benefits of Responsible Development Islamic Investments Banking Emphasis on Ethical/ M oral Ability to tap into Values The Retail M arket Risk/ Profit Sharing Emphasis on Trust Jaiz International Plc Presentation 18 EFInA Innovation Forum

Benefits of Islamic Banking  Diversification & Deepening the market;  Reducing the size of the unbanked;  Skill acquisition;  New sources of international capital flow;  Improves regional competitiveness; Jaiz International Plc Presentation 19 EFInA Innovation Forum

6 Conclusion Conclusion Jaiz International Plc Presentation 20 EFInA Innovation Forum

Conclusion Conclusion  Islamic Banking is very profitable;  Nigeria should not be left out of this growing global phenomenon;  Islamic Banking can empower our people by bringing in the informal sectors;  In line with CBN’s FSS 202020.  We need the cooperation of all stakeholders,esp the Regulators, for all of us to benefit from Islamic Banking Jaiz International Plc Presentation 21 EFInA Innovation Forum

THANK YOU THANK YOU Jaiz International Plc Presentation 22 EFInA Innovation Forum