In this interview with Daily Trust at the premises of the just concluded 2023 Islamic Development Bank (IsDB) Group Annual Meetings in Jeddah, Saudi Arabia, the MD/CEO, Jaiz Bank Plc, Sirajo Salisu, spoke about the $10m Murabaha agreement with the International Trade Finance Corporation (ITFC) and his vision to see Islamic banking dominate the banking sector.
Once again, you are part of those who got to sign an agreement this year, how has it been?
Attending the annual event of the Islamic Development Bank (IsDB) is normal for us. Last year it was held in Egypt and alhamdulillah today we are here in Jeddah because IsDB is a shareholder in Jaiz Bank and through the subsidiaries of IsDB, we have been doing so many types of business. Be it ICD, ITFC as you can see today.
What is the relationship like?
This is a journey that started in 2018 when we signed $4 million and the essence of the facility is to assist our international business people around.
From $4 million we moved to $5 million immediately after COVID and you can see today we have signed $10 million. This kind of progression we are taking it gradually so that we don’t rush. We have the capacity to do more but we are looking at how the businesses are expanding and we are also expanding.
How will this impact businesses, especially at the local level in Nigeria?
What we are doing basically is to finance those people that actually have receivable in dollars so that their business will continue to grow.
We have heard also today what they say. That they hope that by next year, we should be able to move to $20 million. The essence of this facility is actually a trade finance line and we are financing those business people that actually have income coming in foreign exchange.
We don’t want a situation where you bring a facility to assist a businessman and end up also killing his business. If you give somebody financing in dollars and he is receiving his income in naira, a time will come when inflation or fluctuation in the price can affect the business.
You can be a local business person and be an exporter. If you give somebody $5 million and he is only doing a local business, the time will come when you will do the conversion and he cannot pay back and that is a deliberate attempt from us to increase the export-related businesses because we can no longer continue to rely on one source.
By the time you finance different people exporting different commodities, what is coming back into the country is foreign exchange.
Can you shed more light on this Murabaha facility?
This Murabaha financing facility is not only with the ITFC where you have the trade finance line but even the one related to the ICD, be it $20, $25 million dollars that we have been enjoying, like I mention is to finance the people that will buy locally but they will export and it keeps going.
Both ICD and ITFC as you heard today, are very happy with our performance. There has never been defaulted even once and that is why you see we keep renewing and also enhancing the total amount.
It is specifically for our local people who will do the local purchase but will have to be in the export business. If you are not in export, it will be very difficult for you to take financing in foreign exchange and use it locally, it will be an issue for you.
Take a very clear illustration; if you take $2 million three years back when the dollar was around N350, N360 and today, at the official rate we are talking about N460, N500. How will you pay?
When you go back home to Nigeria, look at so many things that you can export, almost everything around and that is why we created an export desk to now highlight and educate our people that we have a lot of things that they can actually export.
What has been the driving force so far?
The issue here is; we have never defaulted in our relationship with any of our subsidiaries. It is always good to keep to the promise and be good while keeping to the contract and agreement.
But, most importantly, we are not giving facilities to people anyhow, we have to appraise your activities, understand your business and prove your financial prudence and believe that you are fully committed.
What we are doing is just be like an intervention. You cannot collect people’s money and give to somebody that you don’t trust. Whatever he or she does, will reflect on the reputation of Jaiz Bank.
Islamic banking is still trying to break through into the banking sector in Africa and Nigeria especially, how is the journey so far?
When you talk about Islamic banking, let’s look at it globally before we come back home. Globally, it’s becoming much more acceptable; you go to Europe, Asia and different other places, it is growing.
When you come back home, the success of Jaiz has actually led to the establishment of other Islamic banks. Now we are taking of two, three and others are coming up.
The more we see people coming into the area of Islamic banking, the happier we are that the business is actually profitable, sustainable and it’s something that we can actually continue to do. We are not looking at them as competitors, we are looking at the sector generally because we want to see Islamic banking dominating the banking sector.
Now if you add together, banking generally in Nigeria started more than 100 years ago, now we have only a few Islamic banks and our competition is to those doing the potential services not among the banks ourselves.
What are you doing differently to bridge the existing gaps?
Technology has come to stay. There is no way you can do banking today without technology. We are embracing that area and at the same time, we are also trying to grow the physical branches.
Today we have 47 and we are looking at closing with 13 additional making it 60. On one hand, we are expanding in terms of branches while on the other hand, we are embracing technology because it’s the key thing and you have to reach out to as many people as possible.
With our ATMs, POS, internet banking, and MSME financing, we are among the best and are bridging the gaps beside partnerships with different organisations and will continue to move along that line.