KEY POINTS

• Jaiz Bank’s financing portfolio stands at about ₦800 billion, with a focus on trade, Managing Director Haruna Musa says.
• More than ₦100 billion supports trade in cocoa, cashew and other non-oil export products.
• Bank financing should cover MSMEs, manufacturing, agriculture and the entire solar energy value chain, Musa says.
• Islamic finance expert AbdulRazzaq Alaro says non-interest banking can create jobs through funding tied to productive economic activities.
• Nigeria’s National Halal Economy Strategy targets a contribution of about $12 billion to GDP in the coming years.

MAIN STORY

Jaiz Bank’s Managing Director, Dr Haruna Musa, has put the bank’s financing portfolio at about ₦800 billion, with trade among its major priorities, as he called for more funding for exports, small businesses and other productive sectors of the Nigerian economy.

Musa spoke at a breakfast session during the 32nd Nigeria Economic Summit (NES32) in Abuja on Tuesday. He said more than ₦100 billion was supporting trade in cocoa, cashew and other non-oil export-related products.

He urged non-interest banks to increase financing for micro, small and medium-sized enterprises (MSMEs), manufacturing and export businesses to strengthen local production, create jobs and generate foreign exchange.

According to Musa, financing decisions should reflect how individual businesses operate and earn revenue. He said banks must understand their customers’ activities and structure financing arrangements around their business models and cash flows.

“In the non-interest banking model, we have various contracts, and these contracts must align with the business model and cash flows,” Musa said.

He also urged entrepreneurs to understand the financing options available to them and explain their business requirements clearly so that financial institutions could determine suitable arrangements.

Musa identified exports as a priority because of their potential to generate employment, earn foreign exchange and support economic development. He also called for greater funding for manufacturing to expand domestic production.

On renewable energy, he said financing should extend across the solar industry’s value chain rather than focus only on the installation of solar systems. He added that such funding could improve electricity access for essential facilities, including hospitals.

He similarly advocated financing across the agricultural value chain, from farm inputs to processing and distribution. He also called for improved access to non-interest financial services for women, young people and rural communities underserved by conventional banking networks.

Musa said digital platforms and partnerships with financial technology companies could help banks reach more customers and improve service delivery. Citing his own experience, he disclosed that he had gone almost a year without visiting a bank branch because he conducted transactions through his mobile phone.

He said mobile banking and other alternative channels could reduce dependence on physical branches while improving customer experience. He added that non-interest financing could support businesses seeking to enter export markets or establish factories, provided the financing structures suited their needs.

Also speaking at the session, Professor AbdulRazzaq Alaro, a professor of Islamic Law at the University of Ilorin, said non-interest finance could promote job creation and shared prosperity because it links funding to real economic activities.

He explained that the model is based on risk-sharing, asset-backing and transactions connected to productive activities.

“When you channel money to productive economic activities, you automatically create jobs. You automatically get economic growth, and that will ultimately result in shared prosperity for all,” Alaro said.

He identified Nigeria’s large population, young workforce and agricultural and petroleum resources as opportunities for expanding non-interest finance. He also singled out MSMEs as a sector where the model could support production, business expansion and employment.

Alaro said different Islamic finance contracts could serve different economic purposes. He cited the Salam contract as an option for supporting agricultural activities and Istisna for financing construction, infrastructure and projects involving the production or delivery of specified assets.

He also highlighted Nigeria’s National Halal Economy Strategy, which seeks to position the country to benefit from the global halal market, estimated at about $8 trillion. According to him, Nigeria is targeting a contribution of about $12 billion to gross domestic product through the strategy in the coming years.

He said non-interest banks and other Islamic finance institutions could support businesses serving the halal market by directing funds towards productive enterprises, helping them expand operations and create jobs.

THE ISSUES

The figures presented by Jaiz Bank point to the role non-interest finance could play in directing money towards businesses that produce goods, process agricultural commodities and participate in export markets.

For Nigeria, expanding access to export financing matters because businesses dealing in products such as cocoa and cashew need funding to operate and grow. Greater support for these activities could help businesses reach more markets, earn foreign exchange and create employment. However, the figures provided at the summit do not establish how much additional export revenue or employment the financing has generated.

The structure of financing is also important. A business may have a viable product but struggle to secure funding if repayment arrangements do not reflect when it receives payments or how its operations work. Musa’s emphasis on matching contracts to business cash flows highlights the need for banks and entrepreneurs to understand each other’s requirements before agreeing on financing.

The same principle applies to agriculture, manufacturing and renewable energy. Supporting only one part of a value chain may leave businesses unable to expand because other needs, such as processing, storage, distribution or equipment financing, remain unmet.

Digital banking could also make non-interest financial services more accessible, particularly to people and businesses far from physical branches. But the summit remarks did not provide figures showing how many underserved customers currently use these services or how much access would improve through digital channels.

WHAT’S BEING SAID

• Haruna Musa, Managing Director of Jaiz Bank: “In the non-interest banking model, we have various contracts, and these contracts must align with the business model and cash flows,”
• AbdulRazzaq Alaro, Professor of Islamic Law at the University of Ilorin: “When you channel money to productive economic activities, you automatically create jobs. You automatically get economic growth, and that will ultimately result in shared prosperity for all,”
• Musa on digital banking: He disclosed that he had gone almost a year without visiting a bank branch because he conducted transactions through his mobile phone.

WHAT’S NEXT

The potential impact of the financing approach will depend on whether businesses can access suitable funding and use it to expand production, enter export markets and create jobs.

For the halal economy, the stated target of contributing about $12 billion to Nigeria’s GDP will require businesses to take advantage of market opportunities and financial institutions to provide funding that meets their needs. The summit remarks did not specify a timeline or implementation milestones for achieving the target.

BOTTOM LINE

Jaiz Bank is calling for non-interest finance to support more than trade alone, with funding directed towards exports, MSMEs, manufacturing, agriculture and renewable energy. The wider economic benefit will depend on whether the financing helps businesses increase production, reach new markets and generate sustainable jobs.

Source:NAN