Islamic Banking and Its Implications on Human Capital Development in Nigeria

By ZakaAbdurahman & HuudShittu Ph.D

Abstract

Recently, the Central Bank of Nigeria embarked on provisions for the proper establishment and operation of Islamic (Interest free) banking. This paper examines the viability of promoting Islamic banking in Nigeria and its implications on human capital development. This paper reveals various opportunities for Nigeria in promoting Islamic banking such as mobilization of funds, means of achieving financial inclusion, exchange of expertise, employment generation, promotion of quality services and healthy competition. This paper highlights the challenges that could hinder the development of the Islamic banking industry which include lack of awareness by the general public, lack of a Supervisory council on Shari’ah (Islamic Law), shortage of qualified manpower, prohibitions of interest (Riba) and Usury (Gharar) in all financial dealings among others. To ameliorate these challenges, the study recommends the effective regulation and supervision of Islamic banks, massive sensitization campaign and review of the existing company and banking laws. The paper concludes that the successful development of the Islamic banking industry in Nigeria will depend to a large extent on the size and quality of its human capital. In light of this, the study recommends that the approach of human capital development in Islamic banking to be comprehensive, meeting the highest standard and in close collaboration with the industry shall thereby give Islamic banking a great opportunity to achieve its major objectives of social justice and distribution of income. From the forgoing, it will be established that developing Islamic banking in Nigeria will have positive multiplier effects on both the financial sector and the economy as a whole.