Controversy Erupts over Islamic Banking in Nigeria

Since last week, English and Hausa media in Nigeria have been closely following a controversy over Islamic banking in the country. At the center of the controversy is Sanusi Lamido Sanusi, the dynamic and outspoken governor of the Central Bank of Nigeria (CBN). Since his tenure began in July 2009, Governor Sanusi’s bold moves to fire bankers and restructure banks have attracted worldwide attention. This year he is one of Time‘s 100 most influential people. Sanusi is no stranger to controversy: he has already locked horns with Nigerian lawmakers and the International Monetary Fund. Neither is he a stranger to the intricacies of Islamic thought: he is the grandson of an emir of Kano, he holds a degree in shari’a from Sudan, and he has debated religious topics with some of Nigeria’s most famous Muslim leaders.

CBN Governor Sanusi Lamido Sanusi

The Islamic banking controversy concerns last Monday’s announcement that the CBN has given the go-ahead for JAIZ Bank, which the press calls “the first Islamic bank in the country,” and Tuesday’s issuance of final guidelines pertaining to Islamic banking in Nigeria. Although, as Next points out, “a draft framework for non-interest banking was issued in March 2009 by the [CBN], its position on Islamic banking did not become much of an issue until a few months ago when the final guidelines were released.” Sanusi ordered the guidelines to be rewritten in order to address and/or incorporate criticisms, but some Christian groups continue to denounce the changes.

For example, Bishop David Bakare of the Kaduna State chapter of the Pentecostal Fellowship of Nigeria (PFN) accuses Sanusi of harboring sectarian loyalties and of exacerbating interreligious tensions at a delicate moment:

“Honestly, if Governor Sanusi Lamido Sanusi had done this advocacy for Islamic banking as a religious leader, it would have made a better sense than as a government official. Therefore, Sanusi should come out and tell the nation whose errand he is running and for who he speaks; is it for himself, Islam, or government of Nigeria?

“The PFN, Kaduna State, strongly condemns the Central Bank governor’s Islamic banking agenda at a time like this in Nigeria when we are still battling to douse the tension created by the last ‘political’ crisis with all the evident religious manifestations.“This obviously is an insensitive and reckless act of the highest order coming from such a high ranking officer of the Federal Republic of Nigeria.

“No right thinking Nigerian would ordinarily venture into such a sensitive matter at any time in such a nation like Nigeria without an evil motive to create more tension in the nation or worse still to start another religious fighting such as had never been before in this nation.“Somebody, please, help tell Sanusi to let the sleeping dog lie, and not put the nation into another avoidable distraction and dangerous crisis. We call on President Goodluck Jonathan not to wait until trouble begins before acting.”

Similarly, the powerful Christian Association of Nigeria (CAN) calls the introduction of Islamic banking a move to “Islamize Nigeria.”

Sanusi has responded to criticisms by saying that the attention to Islamic banking at CBN predates his tenure and that what is called “non-interest banking” attracts the involvement of non-Muslims as well, including backers of the JAIZ Bank. Sanusi has also highlighted the presence of Islamic banking systems in other countries around the world, including the United Kingdom.

The controversy has relevance for at least three reasons. First, it affects Muslim-Christian relations, and shows how interreligious tensions appear not only “on the ground” in terms of physical conflict, but also in debates among elites over questions of national policy. Second, it forms part of ongoing changes in Nigeria’s financial system. Finally, this controversy will be another challenge – and opportunity – for Governor Sanusi, who is one of the most important figures now in Nigerian politics. Judging from the wide press coverage the controversy is receiving, many Nigerian elites will be watching closely to see how the controversy unfolds.


For those wanting more background on how Islamic banking works, I recommend starting with the BBC’s Q&A, Reuters’ Factbox, or the Financial TimesBeginner’s Guide.

I was not able to find the most recent guidelines from CBN on Islamic banking, but here are the guidelines issued in December (.pdf).


47 thoughts on “Controversy Erupts over Islamic Banking in Nigeria

  1. The controversy is not over Islamic banking per se, but statements credited to Lamido Sanusi that Islamic Banking will be “Sharia compliant”. There are three issues.

    1. Will Islamic banking be the only form of non-interest banking?
    2. Will non-Muslims be allowed to partake in Sharia banking?
    3. What sort of punishments will be meted out to people who default – will they be Sharia mandated punishments?

    With the implementation of Sharia law in the far North, you’ll understand Christian leaders lack of comfort with this policy.

    I have read reports that Sanusi has since agreed to rewrite the guidelines to accommodate other forms of non-interest banking. But it appears the policy is a mess and the implementation is likely to be controversial.

    This is not first Muslim-Christian argument over Government policy. The Government sponsored pilgrims to Mecca, so Christians agitated for and got Government sponsorship for pilgrimage to Jerusalem. In the 1980s, there was a very serious argument over Nigeria’s membership of the OIC (Organisation of Islamic Conference). I blame Sanusi for being tone deaf and not understanding how controversial the policy could be.

    Sanusi will be one-term Central Bank governor.

    One the other hand, some more information on the suicide bomber:

    • I definitely agree with you that this controversy hearkens back to the OIC controversy and to the debates around shari’a in the late 1970s and after 1999.

      Do you think Sanusi’s rebuttals to the criticisms are effective?

      • Not really, Sanusi did not sell this policy well. Sanusi has the same problem with Buhari, a lack of flexibility.

        He gave the impression that he was too eager to implement Islamic non-interest banking. The question non Muslim Nigerians are asking is simple: “what are the guidelines for non-Islamic non-interest banking?”. The answer is that they simply do not exist. In other parts of the World, this would be academic. In Nigeria, it is a very serious matter.

        There is also a suspicion of the person Sanusi, he is the grandson of an Emir and has a Masters degree in Islamic Studies from a University in the Sudan.

        As someone with experience in business consulting (I worked at Accenture and KPMG), I don’t really see Sanusi as a strategic Central Bank governor. He is a good firefighter, but I haven’t seem much evidence of a strategic thrust for the Nigerian economy. (Note: the job of the Central Bank governor is not just risk management and banking policy, it should also involve macroeconomic policies).

    • It is very surprising to see Christians going against what is constitutionally accepted. Islamic banking in Nigeria will not stop u from banking with the existing banks. Even Christian religious leader could come out against this system when they were not blind when the National Health Isurance Scheme was implemented in Nigeria. The scheme recognise only four children and a wife, which is inline with Christian’s faith but we the muslems never say a thing because that will not stop us from marrying more than one wife and given birth to more children. I think muslems are really faithful to their faith. So i encourage u to behave just the way behaved towards NHIS.

  2. The issue at hand is not well concieved by the pple complaining, the system is not only for muslims alone, but for all intrested person that wnt to perticipate in it, so why bringing sentiment into it, The problems wth we Nigerian, we tend to say things that are not relevant to a perticular issue, instead we just jump into conclusion and say things that are not relevant to the topic in question. Please look through the system, study and see how it works, It even have a better solution to the world economic problems, not only Nigeria. I pray our christian brothers will stop this inciting and learn to adapt to changes that will forster good relationship and better economy.

    • Abubakar,

      The problem is the assumption that non-Muslim Nigerians understand what Islamic Banking is. You will also agree with me that very little effort was made to educate non-Muslims on what Islamic banking is.

      In a nation where the introduction of Sharia was controversial, where a large proportion of the population is poorly educated and where Nigeria’s membership of OIC in the 1980s was controversial, Sanusi has no excuse for handling this issue like a bull in a china shop.

  3. U see, Nigeria is good at copying advanced country’s way of doing things very fast. What took developed countries years of considerations to determine its workability, nigeria would like to evn implement overnight without thorough analysis. Each time issues like this come up i keep questioning the education of our leaders. Must a bank be called islamic bank b4 we can have a non-interest banking institution. Can’t we just call it non-interest institutions. I am a first year student but i think i have common sence than these educated illiterates.

    • they cant do it overnight. before any bank starts, it is given six months to prepare. it is the christians that call it islamic bank. it is because the principles are based on the quran thats y they are refuting it. they have been tasked to develop a banking system from the bible which be called christian banking but they have been unable to do so as the bible has no laid down economic system

      • in a religious tense country , u now bring this, i don’t really care about it, it may be good or bad, but this is a case u handle with caution. i have said will continue till it happens, divide Nigeria.

    • you pple shud pls let them implement this and see the outcome why are nigerians non tolerance of each other religion . when the government mk sunday work free what is the benefit of sunday to muslims, did we complain and friday we go to work. so wat is u guyz problem with the “islamic banking”

      • good point …but the problem is understanding!!! don’t blame Christians reacting this way…we all know what would have happened in the north if the government was to implement something with the prefix christian in this country….i am sure my cousins would have been running back home by now

    • there is difference between non-interest bank and Islamic bank both of them are non interest administrators but in administration of the funds Islamic bank recognize haram and halal that is an Islamic bank cannot finance prostitution, club, breweries, gambling business or any business that is on speculation.

  4. CAN i want to lets u understand that,this contraversy u are taking concerning islamic banking,u are accusing islam and its followers.this shows physically ur are betrayiny ur religious teaching. u should go back and read ur book and look back to what the 9 perparoma john hol said concerning “interest”. i wll continue by saying nigeria isnot only the country that wll adopt e sys.many countries are unto the sys many yrs back like malasia,singapore,uganda,senegal,america,japan,london,saudi arabia etc.

  5. what is islamic Banking? sanusi or what is your name i think u need to sleep and wake, rethink and dont mess with nigerians.

      • Yeh! Nigerian muslims are not after any thing except the will of Allah, so nothing will turn Sanusi’s attemption from emplimenting islamic banking in 9ja by Allah grace.

  6. Nigeria is a country where issues are always liked to be linked wit religion………islamic banking or not……mostly i see to realize wen muslim bring about something new to the country,not that those complaining dont know the truth but we are always after our selfish intrest,bcos one thing or the order dont favour us we disagree with wateva comes up…..i tink wat the christians are considering in their own point of view, is that are they the only one to be paying intrest on loans collected and the muslims are exempted i.e.wont pay….i think thats where the problem lays.

    • the problem in Nigeria is not religious diferences but we all hate God and his Laws, the bible kicks against interest, but those who kick against the Islamic banking system are doing so because they do not want to practice that aspect of the bible therefore they wish every body to continue dis obeying God by the claim that the Law of God has been wash away law of God eventhough christ say he has not come to wash away the law and the prophet but to fulfill them. so why are people criticizing those who desire to carry out banking in line with the commandment of God this is selfishness and n evident of the antichrist. some christians are so blind that they feel Nigeria belong to them alone. so Muslims has no right to practice their own religion in a country that is said to be secular. well it is not their fault, it is the muslims who has been none chalant about their religious doctrine, they think they can dribble God who prohibits usury and riba, well it is haram from which ever angle you look at it. to the critics of the IBS nigeria does not belong to one religious group, if you want to decide or control the muslim in their relious practice. if you hate God must others hate God?

      • first step to solve the problem, kick religion out of governance, call it anything else not islamic..i do not have a problem with the system or whatever it is called but the timimg for using such name is wrong….if this was the other way round, the talking would not be done just on paper….another crisis would have started, so i understand why the christians are reluctant, but we all need to put religion aside and do what is right….God bless Nigeria…although i don’t think we would stick together for the next 20yrs…things are heating up…

    • Everything burning issue in Nigeria should not be tied to religion or ethnicity. when will we learn tolerance and respect other people’s good intentions without minding their religion? I, as a progressive Nigerian, I trust Sanusi’s judgement. One Nigerian must occupy the seat of the Central Bank of Nigeria Governorship. so the earlier we stop this aggressive attacks on Sanusi and help him stir the economic boat well, the better for all of us.

      Some of those bishops and other Christian leaders are pretending to be defending their flocks, but they have very fat accounts in these commercial banks who lend money with high interest rates. They are only trying to defend their investments. They preach against usury but indirectly promote it. Hypocrites! That’s what they are.

      • As I listened to Sanusi’s address to the members of the House of Reps today, Thursday, 21st July 2011, my respect for this man SANUSI tripled. i saw an unbiased individual speaking convincingly to Nigerians at the floor of the House. His show of transparency as evidenced in the numerous documents he presented and read out showed that he meant well. You have my vote for the approval of Islamic Banks or whatever name you may call it. I plead with the National Assembly to give him a chance. May God bless Nigeria and more of the Sanusis..

  7. Why don’t we let peace reign especialy now dat we are recovering the era of decadence in dis country. Its been realized dat d so-called islamic banking system has been a source of commotion, confusion & misunderstanding among Nigerians. It wil b much more ideal to scrap dis idea of islamic banking b4 our economy becomes islamized. Sanusi lamido should not b self-centred or selfish over issues concerning Nigerians. He shouldn’t think Nigerians are fools. Let’s continue wit d usual secular banking system & allow peace to reign or else the bombings, fightings & killings being initiated by d muslims in d north wil b extended to other parts of d country by d same muslims.

  8. I think we should also try to understand why some people are against islamic banking.It would av been more appreciated if the muslims had not caused trouble in the past.They like to impose their will by force or they destroy. Therefore nobody should be blamed for being suspicious or demanding a convincing explanation. e are against islamic banking.It would av been more appreciated if the muslims had not caused trouble in the past.They like to impose their will by force or they destroy. Therefore nobody should be blamed for being suspicious or demanding a convincing explanation.

  9. islamic banking is the best thing that would ever happen to Nigeria. Why not put our religious differencies aside and go into it wholeheartedly. What i see in this whole situation is the ignorance of some people and also the selfish interest of some Nigerians.

  10. The issue is not about the policy but the name, why is it called islamic banking, why was microfinance bank not called Jesus or christian banking. But what policy governs islamic banking? Lets just change the name looking at the religious crisis in nigeria. I hope their is no more religious war in nigeria over this issue bt whereas lets just put nigeria in our prayers as concerns bokoharam and i-banking. Love u all bth xtians and muslims but God and Jesus lvs u most.

  11. Islamic Banking is the answer to our decaying economic system. To the critics, all they need is to ready to learn, so they should seek the truth and truth shall set them free. they should also know that, nobody is forcing anybody to operate non interest system of banking, as they have options i.e commercial banks. But for those who are ready to comply with rules and regulations of our creator, should be given chance to do so. If they don’t want to be forced to operate non interest banking system, It is time for us too, to stop enforcing outrageous interest on us. It is now glaring to the whole world that it is the Christians that are not tolerant. We are all Nigerians, we should have equal rights to attend to our financial issues according to our belief, since CBN is not imposing it on anybody. Let me call the attention of CAN to the fact that out of 365 days that makes a year, 104 days were declared work free day to the benefit of Christians (Saturdays & Sundays). Yet we accommodate it. The yearly pilgrimage which is founder mental pillar of Islam as mentioned in the Qur’an, simply because it enjoys government sponsorship, out of jealousy, Christians rose up that they must be given the same opportunity. That was what gave birth to pilgrimage to Jerusalem.
    Conclusively, let me call on good leaders of Christian who are very objective in thinking when issues come up to call CAN and some Bishops like : Bishop David Bakare to order.

    Lastly, if our economy is to be reckoned with as speculated by Government in year 2020, our financial institution needs to be reviewed and objectively re-engineered without sentiment. The major problems we subject our SME (small and medium enterprises) to the issue of exorbitant interest rate that re not realizable which result to bad loans and subsequently leads to bank liquidation.

    The solution to all these problems is interest free banking system. (Yusuff Aderemi T.)

  12. Peace be to nigeria. It’s an opportunity for muslim to explain what islaamic banking is. It’s not something new and no one will be forced to go to an islaamic bank. If you prefer the interest bank you have the choice. We should call it islaamic bank because it’s a well known bank in the world.

  13. I dnt knw y my xtians countapats wory dmselvs abt ds islmc bankn. Its nt compulsy if u wnt 2 cotnue payn exorbtant intrest rates fine! Bt pls let dos hu dnt wnt 2 go 4 islamic bankn. O if u wnt u cn comout wf xtian bank and am sure if d bank cn mit up dmands it wl oprate.

  14. Islamic banking has being in existence for a long’s introduction in Nigeria should not be seen as a challenge to the christain.It is called is islamic banking because the operations of the institution must follow the sharia law which is base on non intrest.This system banking if one really take a good look u will see that most people who enjoy capitalist systems will never support islamic banking.However,is not that every body most patronise this bank if u like good and fine.Michigan university operate non intrest banking system.

  15. Hello Nigerian christians.Allow peace to rain.Ds is the best way to find lasting solution to Nigeria economy.For how long shall we be practising ds unfavourable economic system?Why don’t we practice ds divine Godly economic-system and shun all these religious sentiment and religious differences.Alternatively,u establish christian banking but ds can not work bcos,bible has no laid down economic-system.Kudos 2 SANUSI.May Allah ease ds task 4 u.

  16. The problem with Nigerians is too much. Nobody says Sanusi is Islamasing Nierian banks or economy. The Islamic bank will work side by side with the commercial banks. If someone is not interested in the Islamic bank, you don’t have to bank with them. The best bank will unviel itself with time.

  17. This move by Sanusi has an undertone. Sanusi is exact replica of mamoud ahmedinajad of Iran, which means our dear country is about to be hijacked by extremists working through him. Our muslim brothers doesn’t have tolerance for infidels, even if they are born from the same womb.b,cus of this it will be difficult to have peaceful coexistence in this country.

  18. I dare say that these our muslim brothers will never stop thinking that this country(Nigeria) is theirs for keeps. And they have constantly abused the one the thing(unity) that has been holding us together since independence.

  19. As much as everybody has right to his/her relegion, christians shoul also come out with good ideas for better economy through their relegion teachings, rather than opposing good changes.

  20. As much as everybody has
    right to his/her relegion,
    christians should also come
    out with good ideas for
    better economy through
    their relegion teachings,
    rather than opposing good

  21. let the xtians folowers open their eyes bcos
    Some of those bishops and
    other Christian leaders are
    pretending to be defending
    their flocks, but they have
    very fat accounts in these
    commercial banks who lend
    money with high interest
    rates. They are only trying
    to defend their investments.
    They preach against usury
    but indirectly promote it.
    Hypocrites! That’s what they
    are. The only
    way to reform the economy me this nation is to allow non interest bankin, and its not call islamic banking, but the christians called it islamic banking, because there is no portion go the bible the talk on economy. Ma salam.

  22. Let’s leave controversy and face the reality,as CAN clamouring over this issue of islamic banking,charles soludo(former governor of CBN) was there for how many years:Ask yourselves?why he doesn’t make the move over christian banking and see what muslims will say about it,it shows incompetency he is;put religion apart and face the reality,non interest banking is ok for everybody fine, what is giving you a serious headache is ISLAMIC that is there and somebody was saying that why they can’t create obatala&sango banking,this is total rubbish for utter this kind statement.That ‘islamic’ is unremovable,just continue giving yourself an uncurable headache.

  23. I employ all Nigerians to be very carefull ‎​​​A̶̲̥̅̊₪d̶̲̥̅̊ take this matter serious cos sanusi should explain d nitty_gritty of islamic banking.sanusi know d situation in which Nigeria is facing now that when he thought of implementing islamic banking. Sanusi has an hidden agenda

  24. Pingback: Islamic Banking System | Finance Search

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