Nigeria’s Central Bank Centralises Regulation Of Islamic Banking
VENTURES AFRICA – Nigeria’s Central Bank has become the latest regulator to opt for a centralised approach to Islamic Banking after it issued guidelines for an advisory body that will oversee the industry in the country. Nigeria has the largest Muslim population in sub-Saharan Africa, virtually half of the country’s 170 million people.
The advisory body, known as the Financial Regulation Advisory Council of Experts, will be tasked with ensuring all banking products that are designated as Islamic conform to sharia principles. The Central Bank guidelines, published on Friday, set out minimum requirements for the advisory body, which will comprise a minimum of five members including one of its official. Members will serve renewable two-year terms, must be qualified in Islamic jurisprudence, and are restricted from working for any other financial institution supervised by the central bank. The guideline also stipulates that the advisory body will be guided by the principles of sharia governance issued by the Malaysia-based Islamic Financial Services Board.
Although Islamic banks have long practiced self-regulation, a centralised model of supervision is increasingly being favoured across much of the world. Morocco is one of the several countries that have adopted such format in a bid to limit differences between products, speed the design of new products and boost investor confidence
Financial institutions that offer Islamic banking products in Nigeria are already required to have their own boards of sharia finance experts, who are limited to serving in one institution at a time. However, the centralization is part of the effort to establish the country as the African hub for Islamic finance.