The concept of Islamic Banking and Finance in Nigeria has been a long and tortuous journey, but notwithstanding the initial challenges that beset Islamic banking operations in the country, Jaiz Bank remains proactive and innovative in meeting customers’ needs.
Since it pioneered Non-Interest Banking in Nigeria, the Bank’s operation continues to deliver world-class Shari’ah-compliant financial services to clientele irrespective of class, creed, race or religious beliefs; thus, contributing to the socioeconomic development of the country.
Abdulfattah Olanrewaju Amoo, an Executive Director in the Bank, heads the Business Development Directorate in the Southern part of the country. He is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and an Associate member of the Chartered Institute of Taxation (CITN), an economist, among others. He is a shrewd professional banker, astute strategic planner and an executor. He is skilled in Talent Management, Strategic Networking and Excellent People Management, among others.
In this interview with Abdulfattah Abdussalam in Lagos, AbdulFattah O. Amoo explains the operational activities of the bank in a capitalist economy such as ours.
In a Capitalist economy like ours, how successful is the foray of JAIZ Bank into Nigeria’s banking sector?
Yes, we are mindful that Nigeria’s banking sector is a capitalist environment; nonetheless, JAIZ Bank, being the pioneer non-interest bank in Nigeria, is a business venture that focuses on providing banking services to the generality of people and organizations in line with the principles of Shari’ah (Islamic Law). JAIZ Bank is over 11 years in operation and true to the aspirations of its founders, it has been able to contribute meaningfully to the development of the Nigerian economy in a sustainable manner, even though Nigeria is a capitalist economy. Within the first ten years of operation, the bank has financed cumulatively different businesses, enterprises organizations and individuals above
N0.5 trillion ( N500 billion) and that is indeed encouraging. The Bank has financed over 30,000 micro, small and medium enterprises across different sectors. In the housing sector, through partnership, we have made modest contributions, having facilitated the delivery of over 20,000 housing units, 7,000 shops and warehouses in different parts of the country to Nigerians. We have also participated in Sukuk as a major investor. Sukuk is a Shari’ah compliant instrument that is similar to bonds in the conventional space. Through Sukuk, the Federal Government has been funding road construction thereby engendering real sector growth and development and positive impact on the country’s GDP.. At the 2nd quarter of 2022, the Bank’s Balance sheet size had grown to three hundred and thirteen ( N313bn) billion Naira, from an initial modest 12 billion Naira that it started with in 2012. Other performance indices such as: profit before tax, return on equity and others have also been very impressive. In 2021, we were able to deliver N4.4 billion in profit before tax and it was a remarkable improvement compared to year 2020. The growth trajectory in JAIZ Bank has been in that realm consistently. In essence, this gives beams of confidence to the owners and managers of the bank that Islamic Banking has come to stay notwithstanding the capitalist nature of the Nigerian economy.
These are impressive developments. But how much of the JAIZ profits go into Corporate Social Responsibility?
The Bank embarks on Corporate Social Responsibility through two areas of interventions. One of such is commercially oriented where the bank moderates its return on its transactions as a way of giving back to the society; though not at full commercial rates. This may not necessarily produce fantastic profits for the bank. For instance, we have been very strong in empowering women in the rural areas of Nigeria. We set up a partnership scheme with women, byproviding their financing needs through Profit or loss sharing arrangement. Under the scheme, over 10,000 transactions have been consummated with remarkable success recorded. The bank is also proud to have been part of intervention schemes of the Central Bank of Nigeria (CBN) for micro, small and medium and large enterprises, via the introduction of variants of Shari’ah-compliant products. Many businesses in the agricultural and manufacturing sectors have been able to access finance at relatively low rates which also helps build their businesses, compete better and by extension, contribute to the growth of the economy. These are two examples out of several others under the first category of CSR that the Bank does. The second category are donations to charitable causes; and I guess, this is your area of interest. The bank sometimes directly donates to individuals and organisations that are considered eligible. In addition, there is JAIZ Foundation which was set up by the the bank. Independently, the Foundation, in addition to what the bank gives, gives financial support (among others) to the less-privilege in the society. The bank has therefore made modest contributions to the society so far and is poised to doing a lot more with Allaah’s support.
How about Corporate Religious Responsibility (CRR), do you have such in JAIZ Bank?
(Chuckles) This is an interesting one! Yes, Jaiz Bank is an institution that runs on Islamic banking principles, but when it comes to the choice of customers we do not worry about their faith, it is about the business they do. For as long as the customer’s business is within what is permissible in with the Shari’ah, they have in Jaiz Bank, a strong business partner that will work with them for the mutual benefits of both.
How prepared is JAIZ Bank for competition in the wake of new entrants?
The emergence of new Islamic Banks in Nigeria is a welcome development and a good testimony that what Jaiz Bank pioneered about 11 years ago is yielding the desired fruits, with Allaah’s permission. “A tree (they say) does not make a forest”. Gradually, a sector is being created in the Nigerian Banking space and in all, the customer is the greatest beneficiary. With the competition, the Banks have ample incentives to be at their best in serving the customers and this brings significant value to all the relevant stakeholders. More importantly, as the Islamic Banking sub-sector grows, financial inclusion is further strengthened, the larger population benefits from the bespoke products being offered which aligns with their preferences and the capacity of the sector is significantly enhanced. Jaiz Bank is poised to continually work with the new players as we already started doing – the rule of the game therefore is collaboration and healthy competition in line with the ethics of Islamic Banking model.
Do you think the Ummah can sustain the human capital needed in the sector?
Thank you, this is a good question! The answer is a yes but there are still challenges to be surmounted in capacity building. Jaiz has a full-fledged academy where it trains people in Islamic Finance and that is why Jaiz-trained staff footprints are everywhere in all the new Islamic Banks in the country. In addition, some universities in Nigeria have started offering courses in Islamic finance, even at Masters Level. However, the stakeholders have to make concerted efforts to continue the training of people towards building human capacity in both theoretical exposure and practical terms. Invariably, if that is done, it will build the capacity required shortly to deliver cutting-edge service delivery in the sector. Some foreign universities and institutions of learning also offer online certificate courses in Islamic Banking and Finance.
Sir, JAIZ Bank keeps money with the CBN. Is it non-interest?
Yes, Jaiz just like any other Bank (whether Islamic or conventional)is mandated as a minimum to maintain a current account with the apex Bank. In addition, there is also another account that warehouses the cash reserve that CBN maintains for all the Banks in Nigeria. None of these accounts attracts interest, hence there is Shari’ah non-compliance issue. Finally, CBN also approved a number of Treasury related products which are based on non-interest and Shari’ah principles and aimed at managing liquidity in the system.
How does JAIZ Bank manages non-permissible income in its operations?
Firstly, we need to define the term “Non-permissible income”, which is an item of revenue or penal charge in the Bank’s books that is not permitted to be recognized as income by the Shari’ah. Revenues made by an Islamic Bank can be voided by Shariah Audit (whether it is internal or external) if the underlying transaction which ordinarily is Halal (permissible) but in its operation, the standard acceptable steps or products were not followed. On the other hand, penalties or compensation which Islamic Banks are allowed to charge “borrowing” customers in order to encourage “credit discipline” are not allowed to be earned by the Bank, but rather must be donated to charitable causes. This clearly, is one of the unique benefits that Islamic Banking offers vis a vis conventional banking.
The second part of the question is management of the Non-permissible income (NPI). The NPI is domiciled in a designated account for which periodic reports are sent by the Bank to CBN through the Financial Regulators Advisory Committee of Experts of (FRACE) of the apex Financial Institution. For emphasis, the bank is not permitted to use it for its’ benefit in any way.
How often does FRACE come around to check on the bank’s operations?
Well, FRACE does not operate like an audit firm, but in line with regulation, there is no product that an Islamic Bank wants to introduce into the market that will not have FRACE’s approval. While every Islamic Bank operates under the guidance of an Advisory Committee of Experts ACE, which would vet, review and sanction any product that the Bank is introducing from Shari’ah compliance standpoint, it still passes through the FRACE for final approval.
What mechanisms are there in Jaiz to address customers’ complaints?
We have a wide range of platforms through which our customers can reach out to us. The most recommended is our 24/7 contact centre which can be reached via phone calls, online chat, social media handles, website, etc. The details are as provided below:
Contact Number: 07007730000
The traditional touchpoints (customer service desks) in branches are still available, albeit only during working hours. Today, we have over 40 branches spread across different parts of Nigeria. As our customers interface with these branches, they lodge complaints and get prompt resolutions.. The Bank has internal mechanisms for tracking and monitoring these complaints to minimize unpleasant experiences while looking forward to regular feedback from customers. . Let me, at this juncture, assure our customers that we work day and night towards ensuring that their expectations are met and sometimes exceeded. The hallmark of our service delivery is to spare no efforts for their comfort, satisfaction and convenience, as they access Jaiz Bank’s bespoke products and services.
How do you think we can curb the current rate of inflation in the country?
It is a difficult one, now. What we’re going through as a country, as we all know, is that the inflation rate has been on the rise, month on month. Economic experts have predicted that it is likely to rise above 20%. What needs to be done, is to examine the causes of inflation in the country and address them squarely. Two major types come to mind: Demand-pull and cost-push inflation. Due to the country’s almost insatiable demand for foreign exchange because of her high import-dependency and the continued depreciation of the Naira, there was bound to be high inflationary pressure. Secondly, the massive infrastructure deficit which has affected the growth and development of the real sector. The solution therefore lies in addressing the root causes which include: diversification of the economy, deliberate and sustained investment in critical infrastructure that will aid local production in a competitive manner, examples: electricity, road, mass transit, ease of doing business, curbing corruption, etc.
Sir, which is more of interest: Islamic Banking or Conventional Banking?
Aha (chuckles). There is no argument at all. I thank Allah Subhanau wa Ta’ala for granting me the privilege of working with the pioneer Islamic bank in Nigeria. This is where I belong exactly without an iota of doubt. I mean, this is what I had always dreamt of – a day that I will have this opportunity to be part of Islamic banking and live my life in line with Allah’s commands on financial matters. Islamic banking is of interest, it is not all about money but about putting smiles on the faces of people. I cannot quantify the amount of joy that I derive working for Jaiz Bank and that makes it a special place of my interest/passion.