The Managing Director and Executive Officer of Sterling Bank, Abubakar Suleiman, said it is high time Nigeria tapped non-interest banking to fund its infrastructure deficit. Suleiman made this suggestion at the inaugural Non-Interest Finance Forum held in Lagos, recently.
Non-profit banking is based on a business model that mitigates the risk of uncertainty. It is guided by sharing principles in the areas of profit and risk. The popular forms are equity-based, service-based, and debt-based. In these forms partners combine assets or resources to carryout profit making ventures; or one partner provides capital while the other provides business expertise or labour.
It could also be deployed in sales partnership as a buyer and a seller agree on markup and cost-plus price in trading services or products.
The Managing Director, represented by the Executive Director for Commercial Banking at Sterling Bank, Tunde Adeola, said the Federal Government has largely neglected the advantage surrounding the alternative form of financing. He recalled that the government had only resorted to it once or twice through the popular Sukuk.
Citing Osun State as the only state that also has taken advantage of the alternative financing concept, Suleiman said it is time it expanded into mainstream financing as an ethical funding platform for bank customers.
However, the Managing Director and Chief Executive Officer, Lotus Capital, Hajara Adeola, emphasised the need to tidy up documentation, risk, and securitisation of asset to make the alternative financing system more appealing for bankers and customers.
She added that the system can be used to reduce the housing shortages currently bedeviling major cities in Nigeria.
Globally, according to the World Bank, Sukuk or non-interest banking is growing at an exponential rate with assets totaling $2.2 trillion as at 2018.
