For many, the lockdown and COVID-19 pandemic impacted their lives and Business immensely. Interestingly, it was a blessing in disguise for some people.
One of such people is Ridwan Sanusi, investor, entrepreneur and Islamic Finance expert.
He strongly believes that: ” the current state of the economy calls for various government reforms and initiatives that should be targeted at creating an enabling environment for various financial players and local businesses”.
Happily, Sanusi goes down memory lane to recall how his father-in-law inspired and motivated him. ” He was my number one mentor and his words of advice was priceless. His life was an inspiration to me and many people around him. He impacted so many lives with everything he possessed regardless of what he was going through”.
Young Sanusi lost his father as a teenager and it was tough growing up. His childhood experiences, therefore, compelled him to work very determined to make it against all odds. You want to know if Christians benefit from Islamic banking and he responds this way: ” Yes, I always say that Islamic banking and Islamic Finance isn’t only for Muslims. It’s for humanity. The principles of Islamic banking align with good virtues that everyone would like to see in others or in our financial institutions. Virtues like Fairness, Justice, Equity, Transparency, Spirit of Brotherhood, Trust, Partnership, and Risk Sharing amongst others.”
He goes on to explain that in Islamic banking, the customer and the bank are regarded as partners in the transaction and they both seek to ensure the successful execution of the transaction.” In conventional banking, the bank is a lender who only cares about the interest it earns on the loan. When the customer finds it difficult to pay back, rather than share in the risk, the bank look for ways to recover the facility with additional interest that would have accrued on the loan default thereby further increasing the burden on the customer. The customer on the other hand, will inflate his price of goods or services in order to meet up with the interest payments. A non-interest bank will never say no to anyone who wants to transact with the bank because of their faith. Islamic banking is part of our day-to-day dealings with one another irrespective of our religious belief”.
Next, Sanusi talked about ways Nigerian Banks can operate Islamic financing to the benefit of the entire Nigerian populace.” We only have three non-interest banks with a banking license compared to over 20 commercial banks. This should tell you that the activities of the commercial bank would overshadow the non-interest banks. In an economy like Malaysia where the number of Non-interest banks are almost the same as their commercial counterparts, their people are reaping the benefits of the Islamic banks. So, we need more non-interest banks in Nigeria”.
The Non-interest banks , he explained can provide financial services and products that will help to support small businesses, drive financial inclusion, and reduce unscrupulous lending activities of some commercial and Micro-finance banks. “Non-interest finance products are designed to help preserve and elevate the wealth of individuals through effective collaborations between all stakeholders. What we see in our conventional financial system today is tantamount to a Ponzi scheme. A situation where people who are benefitting from the financial system are not the real owners of the money or wealth. Islamic finance helps to redistribute wealth across the system in an equitable way by ensuring that you can only benefit from what you own”.
Sanusi goes on to talk about the rules that guide Islamic Finance. ” Making money on money that is not backed by an asset is prohibited. Islamic finance encourages investment in the real sector/economy. This is because; charging interest on loans can create artificial transactions without any benefit to the economy”.
He continued: “A gives money to B with 10% interest, B can give the same money to C with 15% interest, and then C gives the money to D with 20%. Each party in this chain has benefitted without having real ownership of the money and without creating any tangible product or asset that will benefit the people.
Islamic banks on the other hand will enter into a partnership contract with a customer who runs a business and shares the profit made on the transaction according to a pre-agreed profit sharing ratio”.
Alternatively, the Islamic Bank can buy an asset and resell to the customer at a fixed markup. When the customer is genuinely facing some business challenges, the Non-interest bank along with the customer will find effective ways to turn things around without inflicting damage or pain on the customer.
Leave a Reply