The Regulatory Challenges for Microfinance Banking among Muslim Communities in Nigeria: Hypothetical Study
Main Article Content
The World has been facing challenges in all the three most important dimensions of sustainable development, which include economic, social and environmental challenges. More than 1 billion people are living in abject poverty and income inequality around the globe; this figure is believed to have resulted in huge economic and social costs and may endanger many lives on the planet. Thus, many countries began to adopt the microfinance banking model of Bangladesh, aiming to address these growing economic concerns. Although the model has not been named Islamic, its clear features indicate that it is driven by the core practices of Islamic financing that encourages supporting the poor and vulnerable communities and discourage the concentration of wealth in the hands of a few individuals. However, the nomenclatures and the regulations set up for microfinance banks by financial regulating bodies becomes a clear and radical departure from the originating model to the extent that Muslim communities are mandated to obtain licenses to operate a Microfinance bank which is hitherto named (Islamic). In similar efforts, the Nigerian government adopted the Microfinance system into its regulated financial institutions in 2015 with a major aim to provide finance to economically active poor excluded from financing by conventional banks, provide employment, engender rural development and reduce poverty. However, the regulations for the operations of Microfinance banks are often more inclined towards conventional banking, which compelled Muslim communities to obtain licenses for operating Islamic Microfinance Banks. The Central Bank of Nigeria (CBN) sets stringent rules that could hardly be achieved by intending Muslim communities. This paper theoretically examines the CBN regulations for establishing Islamic Microfinance Banks to propose practical solutions to address the difficulties of establishing these banks in Muslim communities in Nigeria.
The material presented by the authors does not necessarily represent the viewpoint of editor(s) and the management of the Al-Madinah International university (MEDIU) as well as authors institute.
All articles published in International Journal of Science in Management (IJSM) by Al-Madinah International University MEDIU(Malaysia) is licensed under a Creative Commons Attribution 4.0 International License.
© ISMJ is published by the Al-Madinah International University (MEDIU)
Plaza Masalam, 11th floor, Jalan Tengku Ampuan Zabedah E 9/E, Seksyen 9, 40100 Shah Alam, Selangor, Malaysia