Co-founder of Taj Bank recently licenced by the Central Bank of Nigeria to begin banking operations in the country, Hameed Joda, has said that the Nigerian banking sector has continued to embrace the values of Islamic banking.
He predicted that not less than five per cent of the country’s banking industry would embrace non-interest banking in the next five years.
Discussing major wins for Islamic finance since its introduction into the Nigerian financial landscape in 2009, Joda said apart from expanding the number of players in the sector from one stand-alone bank to two, “some insurance and investment banks have become involved in non-interest finance and we believe that within the next two to five years, non-interest banking will account for as much as five per cent of the banking industry in terms of total assets,” adding that although it was a relatively new sector of less than 10 years old, it was “making significant progress in leaps and bounds.”
Discussing the growth process, he said, “We conceived the idea of setting up a non-interest bank around November 2015 and we started working on the project from capital raising because the initial stage was the capital raising exercise, having to put down the seed capital and convince investors to believe in the idea that the non-interest banking model is very much workable in Nigeria. At the end of the day, after two years, we were able to raise the minimum required capital by the Central Bank of Nigeria. We raised more than five billion naira.
“So, it was indeed a very arduous process; the regulators were very thorough and we had to raise more capital because that was what the regulators wanted. At the end of the day, I’d say it was very much worth it. We have two stand-alone non-interest banks in Nigeria, which means that the market is growing and the non-interest banking model is gaining acceptance with the Nigerian populace.”
He added, “Furthermore, the institution has been able to create jobs for young Nigerians. One of the major problems in Nigeria today is youth unemployment. So, if an institution is able to create jobs for Nigerians, then I think it is a big achievement. In addition to that, a bank is a catalyst for economic development. We are hoping to finance a number of sectors in the Nigerian economy, especially agriculture.
“We believe we should focus on agriculture and hence make significant growth impact on the Nigerian economy. It is only an institution like a bank that can provide the funding that is needed for the varied sectors to thrive and that itself is a big win for the Nigerian economy. Indeed, we are very proud to have gone through this process to secure the licence. The regulatory authorities did a good and thorough job. They took their time to ensure that all the critical requirements were met.”
