THE POLITICAL ECONOMY OF THE PROPOSED ISLAMIC BANKING AND FINANCE IN NIGERIA: PROSPECTS AND CHALLENGES

Abstract

One major problem of entrepreneurship in Nigeria is the lack of and limited access to initial and running capital. The commercial and micro finance banks in the country make it difficult for these businesses to survive, among other factors, through high interest charges which do not encourage their growth. They also do not provide adequate support for their borrowers. With the coming of the proposed Islamic banking also known as ‘non-interest’ banking, this paper foresees a lot of prospects for the Nigerian economy ranging from availability of adequate capital at no interest, employment provision, higher economic growth, to partnership between the lender and the borrower which leads to a mutual share in the gains and losses of the business. With the aid of Political Economy framework, the paper argues that Nigeria stands to reap from the policy numerous political cum economic prospects as will be discussed in the paper than challenges. It goes further to state that the argument being postulated by the antagonists of the
policy over the planned ‘islamization of Nigeria’ with the policy holds no water and is rather misleading as the banks involved must act within the laws that set them into operation in the Nigerian state.