Non-Interest Banking In Nigeria: Tax Issues (I)

source : Leadership.ng

The storm surrounding the introduction of Non-Interest Banking (NIB) commonly called Islamic banking is gradually settling down and it is important to begin to exhume the challenges that might crop up in its operations with particular reference to the taxation of the sub-sector by the relevant tax authorities, especially the setting of standards for the type of taxes that apply and that are to be collected from the transactions.

As the name implies, Non-Interest Banking (NIB) is a system of financial services that provide unique services in accordance with Islamic religious jurisprudence and Sharia principle and fully regulated by the relevant regulatory authorities as provided for in sections 9, 23 and 52 of the Banks and other Financial Institution Act (BOFIA) 1991 as amended. The CBN is empowered by law, to issue licenses to appropriate entities for the establishment of non-interest banks provided they meet the regulatory requirements.

Read more at : http://leadership.ng/nga/isaac_amuire/40226/2012/11/16/noninterest_banking_nigeria_tax_issues_i.html

Sudan Backs Central Bank of Nigeria On Non-Interest Banking

The monetary authority in Sudan has expressed its readiness to supportthe Central Bank of Nigeria (CBN) in implementing non- interest banking in the country.A statement by the CBN and signed by its Head of Corporate Communications, Mr Mohammed Abdulahi, stated that the support, which isfrom the Central Bank of Sudan (CBOS) would be through experience sharing and capacity building.

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According to the statement, a CBN delegation led by the CBN Governor, Sanusi Lamido Sanusi , had visited the CBOS where the CBN Governor intimated officials of the CBOS on the on-going efforts to develop a regulatory and supervisory framework for non-interest banking inNigeria. The Advisor to the CBOS Governor on Non-interest Banking, Dr. Ahmad Ali Abdullah, assured the CBN of the readiness of the CBOS to support CBN in the implementation efforts.

Non-interest banking is provided for in Nigeria in Sections 9, 23 and52 of the Banks and other Financial Institution Act 1991 as amended. The visit to the CBOS coincided with the participation of the CBN delegation to the 16th Meeting of the Council of Islamic Financial Services Board (IFSB) in Khartoum, Sudan, this month. That was thesecond meeting attended by Nigeria since the CBN became a full member of the Council in January 2009.

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The meeting was preceded by an international conference with the themes, the Changing Landscape ofIslamic Finance – Imminent Challenges and Future Directions andDeveloping Capacity Building to Enhance Financial Stability in theIslamic Financial Services Industry.

According to the CBN, the Council deliberated on several issuesincluding strengthening of Islamic financial system and approved inprinciple to establish an inter-governmental special purpose entity tohelp in building liquidity management infrastructure at both domesticand international levels.

“This is to be achieved by facilitating cross-border liquiditymanagement among Non-interest financial institutions through theacquisition and maintenance of global pool of sovereign assets,” CBN said.According to the Council, said the Nigerian apex bank, such sovereignassets must be suitable for use as underlying asset on which it wouldbenchmark the issuance of highly rated Islamic bonds to be tradedglobally.

“Other areas which the council deliberated and agreed upon include theissue of capacity building among the operators and regulatoryauthorities with a view to strengthening their operations and ensuringefficient service delivery in the industry.The CBN delegation to Sudan which comprised the Governor, MallamSanusi Lamido Sanusi; Deputy Governor, Financial System Stability, Dr.Kingsley Chiedu Moghalu; Director, Financial Policy and RegulationDepartment, Mr. ChrisChukwu and others returned to the country last week.

source : allafrica

Nigeria inches closer to establishing Islamic banking model

 

The Governor of the Central Bank of Nigeria, Mr. Lamido Sanusi’s initiative to establish an Islamic banking model in the country is getting closer to reality. To foreclose any doubt and capitulation to varied criticisms against the proposal, the apex bank‘s helmsman led a delegation from the CBN to the 16th Meeting of the Council of Islamic Financial Services Board in Khartoum, Sudan recently.

The meeting, the second attended by Nigeria since the CBN became a full member of the council in 2009, serves as a tonic for the regulator to reaffirm its commitment towards establishing the model of banking operated according to the dictates of Sharia law.

Sanusi, who has never hidden his passion for the non-interest banking paradigm, is of the opinion that the prevailing economic meltdown has increased the demand for Islamic financial products and services across the world.

His belief stems from the perception that while the recent economic meltdown lasted, Islamic institutions displayed strong resilience reflecting their conservative approach to business, balanced and ordered appetite for growth and focus on the basis of financial intermediation as opposed to innovation.

At the Khartoum gathering, Sanusi intimated the leadership of the Central Bank of Sudan of the ongoing efforts by the CBN to develop a regulatory and supervisory framework for non-interest banking and solicited the support and cooperation of the mainly Islamic country‘s banking regulator in that regard.

As expected, he got a positive response from the Advisor to the Governor of the CBS, Dr. Ahmad Ali Abdullah, who represented the Governor.

He was assured of the readiness of the banking regulatory authorities in Sudan to support the CBN in its implementation efforts through experience sharing and capacity building.

During the meeting, the council deliberated on several issues including strengthening of Islamic financial system and approved in principle to establish an inter-governmental special purpose entity to help in building liquidity management infrastructure at both domestic and international levels.

The CBN, in an e-mailed statement to our correspondent on Friday, said, ”Establishing the special purpose entity would be achieved by facilitating cross-border liquidity management among non-interest financial institutions through the acquisition and maintenance of global pool of sovereign assets.”

According to the council, such sovereign assets must be suitable for use as underlying asset on which it would benchmark the issuance of highly rated Islamic bonds to be traded globally.

Other areas which the council deliberated and agreed upon include the issue of capacity building among the operators and regulatory authorities with a view to strengthening their operations and ensuring efficient service delivery in the industry.

Sanusi believes that the global financial crisis exposed the deficiencies in the conventional banking system and damaged the confidence in the global governance system.

The CBN boss had said in an earlier gathering that he initiated actions to develop a regulatory and supervisory framework for Islamic banking in Nigeria in recognition of its benefits in a growing economy like Nigeria.

To realise the non-interest banking model, the CBN intends to deploy a number of strategies to address some of the identified challenges,

These include extensive capacity building through collaboration among the various stakeholders to develop cognate expertise in non-interest banking, development of an adequate regulatory and supervisory framework for the effective operation of non-interest banking in Nigeria, promotion of greater cooperation and coordination among relevant regulators and other stakeholders such as the Securities and Exchange Commission and the Nigerian Stock Exchange, the National Insurance Commission, the Nigeria Accounting Standards Board, among others.

source : the punch

First Islamic Microfinance Bank Launched in Lagos

The first Islamic micro finance bank in the country, Al-Barakah Micofinance Bank was yesterday commissioned in Lagos.

The bank is an initiative of The Muslim Congress which spans 16 years.

At a well attended event, the Chairman of Al-Barakah MicroFinance Bank, Dr.Abdul Hakeem Mobolaji said the bank is set up in response to the increasing demand for alternative micro credit products by the less privileged members of the society against the conventional banking practices.

He also said the bank would provide succour and financial service to the society in support of the Federal government’s drive to eliminate poverty in the country.

“What we are commissioning today represents our contribution towards providing an alternative banking for Muslims and non-muslims alike.

It is our fervent hope that more like-minded individuals and corporate body will embrace this window and deepen the financial market through provision of sophisticated Islamic instruments and finance”.

source : allafrica

Islamic Bank: Global asset worth 750bn US dollars

The global asset of Islamic banking industry has been estimated at 750 billion United States dollars, an Islamic financial expert and Chief Executive, Metropolitan Skills Ltd, Abuja, Hajia Ummahani Amin, has said.

She spoke in Kano at a workshop entitled: Fundamentals in Islamic Finance Workshop for International Islamic Economics and Management of Sciences Project. She observed that the quoted estimate above is without some major Sukuk issues and structured deals, which analysts estimate will run into trillions of dollars in the years to come.

She explained that Islamic banking practices have taken root in the Middle East and Malaysia, while adding that Europe and North America have recorded giant strides in offering Shariah acceptable products in an attempt to satiate an ever-increasing demand for interest-free banking and profitable returns that fall within the parameters of the Islamic law.

She maintained that the quest for Islamic banking is currently moving towards the African continent, pointing out that, at present, only a handful of countries in the continent have an effective Islamic banking infrastructure even though the scope of the section is immense.

She noted that, “in Nigeria, the banking system is about experiencing a proliferation of Islamic banks as the Central Bank of Nigeria is about to introduce new measures that will encourage and facilitate the existence of Islamic banks.”
She argued that Nigeria has an approximately 50 per cent Muslim population, adding that providing a banking framework that would be acceptable to their belief system would not only increase the bankable population but would bring about the benefits of social responsibility and economic empowerment.

She noted that the integration of Islamic Economics has been successfully implemented in Islamic schools in South Africa in the last two years while adding that Kenya, Tanzania and Mauritius have expressed interests in its implementation. She urged the Federal Government, which she said had taken interest in this project, to introduce the Islamic Economics in the educational policy of the country.

source : sunnewsonline

Nigeria: Experts to Brainstorm on Islamic Finance

Investors, analysts, bankers and other financial operators will be exposed to the benefits of Islamic banking in a workshop staged by the Chartered Institute of Bankers of Nigeria and Lotus Capital Limited.

The workshop on Islamic finance and investment products put together by CIBN and Lotus Capital, according to a statement, is scheduled for 22 – 26, March, 2010, at Colonades, Ikoyi, Lagos, at 9.00 am.

It said, participants will have the rear opportunity of not only discussing and appreciating such critical issues and Sub-topics in Islamic Banking as “The Road Ahead: Realizing the Potential of Islamic Finance and Investment”; “Islamic Finance Contracts”; Successful Shari’ah Complaint Product Structuring”; “Islamic Finance: An Alternative Approach to Project Finance and Infrastructure Development” and “Creating Interest Free Bonds” but also hear directly from seasoned Islamic banking experts from Nigeria and abroad.

Top on the list of the high profile discussants include: Professor Dr. Monzer Kahf, of Qatar faculty of Islamic Studies, a Professional Lecturer, Trainer, Consultant and advisor of international repute in Islamic banking and Investment and Mrs. Hajara Adeola, Managing Director, Lotus Capital Limited, a convertible Bond Research Analyst of BNP Paribas, London and an accomplished Consultant at Andersen (now Accenture).

It is expected that at the end of the workshop, participants would be able to reasonably “understand the new global wave of Islamic finance and investment banking”, “learn the Islamic finance instruments and structured products and their relationships with Conventional financing instruments” “understand Islamic Finance contracts”, “Provide with an in-depth understanding of the growing Islamic investment funds, their structure and growth” and “Know how to structure Islamic insurance/Takaful products”.

source : allafrica