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Thursday, July 7, 2011

IMF MD okays Islamic Bank for Nigeria

Former Finance minister Ngozi Okonjo-Iweala yesterday urged opponents of non-interest Islamic banking in the country to dispassionately understand the idea, which she said is simply another form of banking
that is functioning well in other countries. Okonjo-Iweala, a managing director at World Bank and now minister-designate, spoke while fielding questions from senators at the Senate in Abuja during the confirmation hearing for ministerial nominees.

She said Islamic banking system is being adopted by many countries in the world and that it can function well along with other forms of banking that exist in Nigeria.
“On the issue of Islamic banking, I will say we should look at it without a lot of emotion. I think that as far as I understand it and again it is a question that posed to the Central Bank Governor who proposed it, to my opinion it is another form of banking, where instead of charging interest, the people who take loans from this system share in the profits of the bank,” she said.
“It is just another way to give certain people of the world population who have difficulties with the notion of interests a way to participate in the banking system without having to deal with that issue of interest payment. But there are commissions charged within this system, there are service charges and there is profit sharing.
“I think what we need what we need to do is to unpack what this system is about and try to understand it. When we can look at it dispassionately, it is another form of banking and hopefully, in many countries of the world that are increasingly opening up this type of non-interest charge. From the evidence, I think it’s good to look at actual implementation in those countries, it seems to be functioning relatively well alongside other forms of banking. I will leave that there.”
On the proposed limit to cash withdrawals by the CBN in its drive to attain a cashless society, Okonjo-Iweala said though it is a good idea and in line with global practices, there is need for caution in its implementation.
“I would also be a little careful because it might have the opposite effect. If you implement a minimum or a maximum withdrawal limit, people will decide to keep money under their mattresses and not put them in the bank because they will think they will not be able to withdraw them,” she said. “We have to go about it carefully, I like the objective as they said of moving towards a cashless society, but I think we should implement it with deliberation.”
Commenting on the issue of removal of fuel subsidy, Okonjo-Iweala proposed a partial removal of subsidy as it relates to those that can afford the commodities being subsidised.
“I don’t think the issue of subsidy is an ideological one. The problem is we subsidise for both those that are rich that can do without subsidy and the poor people that really need it. Having a generalised subsidy such as we have is not the right thing to do. We have to find a way to subsidise only for those that need it,” she said.
Okonjo-Iweala gave an indication that she could once again dump the ministerial job like she did under former President Olusegun Obasanjo should the circumstances become unfavourable.
She said, “I served the country for about three years and when I determined that I could no longer perform and give to the country the way that I would want I resigned, which is the honourable thing to do. So I did not runaway. When the circumstances are appropriate to serve you serve and if they are not appropriate you go and do something else.”
The former minister who may be re-assigned the Finance ministry promised to contribute to the much needed economic growth of the country by working selflessly to achieve the targets.


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