Financial Experiment in Africa... World Impact To Follow?
Islamic banking necessitated by effect of global meltdown – ADO-EKITI— THE Governor of Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, has said the introduction of Islamic banking into our financial system was “necessitated by the effect of global meltdown that castrated the Nigerian financial system and slowed down the growth of the economy.”
He, however, assured that Nigeria’s subscription to Islamic banking would revive the current downturn of the country’s economy.
Sanusi pledged to dialogue with the leadership of the Christian Association of Nigeria, CAN, this week on the issue. [Gbenga Ariyibi has more...]
...this I find very interesting, because as society is growing and changing and you could almost compare recent developments on the world scene to the volcanoes and earthquakes that have been re-shaping the planet...
...we need a new system to match up with some of the financial things happening, like the use of mobile phones for banking across Africa and Asia ... the 'micro-loan' concept ... online banking ...
So, look at all of the news hitting the "financial fan" - try to make sense of it - and let's keep an eye on this development in Nigeria.
Islamic banking has the same purpose as conventional banking: to make money for the banking institute by lending out capital. Because Islam forbids simply lending out money at interest (see riba), Islamic rules on transactions (known as Fiqh al-Muamalat) have been created to avoid this problem. The basic technique to avoid the prohibiton is the sharing of profit and loss, via terms such as profit sharing (Mudharabah), safekeeping (Wadiah), joint venture (Musharakah), cost plus (Murabahah), and leasing (Ijar).
In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments. However, the bank's profit cannot be made explicit and therefore there are no additional penalties for late payment. In order to protect itself against default, the bank asks for strict collateral. The goods or land is registered to the name of the buyer from the start of the transaction. This arrangement is called Murabahah. Another approach is EIjara wa EIqtina, which is similar to real estate leasing. Islamic banks handle loans for vehicles in a similar way (selling the vehicle at a higher-than-market price to the debtor and then retaining ownership of the vehicle until the loan is paid). [source: wikipedia]
Gas prices on the rise; top $4 in eight states...
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Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and Dave Lucas are properly cited. Permission to reprint any comments below is granted only for those comments written by Dave Lucas and staff.
