Islamic finance can fund $134bn infrastructures in Africa – Expert

An Islamic Financial Expert and member, Financial Regulation Advisory Council of Experts in Central Bank of Nigeria (CBN), Dr. Bashir Umar has disclosed that non-interest banking system has the potential to bridge infrastructure gap in Africa which is estimated to cost $134bn from 2011 to 2040.

According to him, such costs are certainly beyond the financing of governments or donors hence the need to devise innovative financing approaches.

Umar was delivering a keynote address on “The Islamic Financial System: A Panacea for National Economic Development” at the business luncheon organized by the Forum for Islamic Education and Welfare in Lagos yesterday.

While making reference to the Programme for Infrastructure Development in Africa, he said access road rate in Africa is only 34%; transport costs are 100% higher; only 30% of Africa’s population have access to electricity.

“This is where Africa has a great opportunity in Islamic Finance. Sukuk instruments, with their efficacy to finance infrastructure development are a vibrant tool for attracting foreign direct investment and direct foreign investment, as well as for structuring many public-private partnership projects”, he said.

The expert noted that the Islamic financial system is the mainstay of global financial system making up 78% of the global assets, saying the response of regulatory institutions in Nigeria to Islamic financial system has been satisfactory.

According to him, it is laudable that various Federal Government intervention funds have non-interest element embedded in them.

One of the intervention schemes, he noted, was the Commercial Agriculture Credit Scheme which guidelines had been issued by the CBN using the Islamic financial modes of mudarabah, musharakah, murabahah, ijarah, salam and istisna, adding this will make development more even.

The non-interest system, he reiterated, would also deepen financial inclusion, noting that the level of financial exclusion according to a 2016 survey in Nigeria is 41.6%.

He said, “There are opportunities for Africans in Islamic financial instruments for the financing of SMEs, which are the backbone of development in terms of employment generation, intergenerational sustainability, as well as overall economic growth.

President of Muslim Ummah of South West Nigeria (MUSWEN), Dr. Sakariyau Babalola who chaired the lecture said Islamic financial system has come of age and has come to stay in Nigeria.