Sukuk: FG Borrowed N350bn in Three Years for Road Projects, Says Jaiz Bank

•Backs CBN’s move against BDCs

James Emejo in Abuja

The Managing Director/Chief Executive, Jaiz Bank Plc, Mr. Hassan Usman, has disclosed that the federal government utilised Islamic financing instruments, particularly the Sukuk, to raise over N350 billion within the past three years to execute road projects across the country.

Speaking on Arise News Channel, a sister broadcast arm of THISDAY over the weekend, Usman also said that the bank has been able to expand credit to the real sector of the economy, financing Small and Medium Enterprises (SMEs) as well as working with women, vulnerable groups and those at the bottom of the pyramid to deepen financial inclusion.

Also, commenting on the recent decision by the Central Bank of Nigeria (CBN) to work with commercial banks rather than Bureau De Change operators in administering foreign exchange to customers, the Jaiz Bank boss said the banks have the traditional mandate to engage in forex transaction.

He pointed out however, that the apex bank in a bid to bring forex services closer to customers decided to use the BDCs, a privilege which he said, had been abused by the latter.

On the growing appeal for ethical financing option, he said, “This mode of financing for public expenditure means you cannot divert the resources, you cannot use the monies raised except for that which you have intended. So it gives credence to the utilisation and also ensure that this resources are earmarked for specific developmental projects.”

He said, “Now if you look the other side where you are looking at the SMEs, Islamic finance tends to be more risk bearing and sharing with the SMEs and so encouraging this type of financing or banking means that the SMEs sector can grow with the support of this type of financing which shares risks and reward of whatever business is done.”

Usman, while backing the CBN’s decision to engage the deposit money banks to undertake foreign exchange transactions going forward, said, “As you know, traditionally, it’s the banks’ job to provide all of these anyway but in other to bring this very close to the customer that’s why the central bank was using the Bureau De change.

“But as you know, this process had been abused and it’s becoming a very huge hole for leakages in the system. I think that the banks, if you watched over the last couple of years have been trying to be very responsible and very conscious of the need of the nation and banks have come to participate in every issue and every situation that requires our help under the leadership of the governor of the central bank and the bankers’ committee.”

He said further, “They tried to do almost everything that is possible to support the community and the government to deliver whether it is social services or some national issues to intervene where necessary.
“And this is also a case where the bankers’ committee has taken this assignment very seriously not only to ensure that foreign exchange is available to customers but also to strengthen the system so that those who are gaming this system would be checked out and be dealt with.

“And so that the nation will be better for it because few people should not be gaming our system and making policy strategies of the fiscal and monetary authorities impossible.”
He stressed that Islamic financing tends to be more involving and therefore ensures extra disciple in the utilisation of resources to guarantee delivery.

He said the financing instrument also further creates the right environment for Public-Private Partnerships where the private sector using Islamic banking products could work with the government to develop long term infrastructure as the profit sharing arrangement allows that to happen.

He added that since 2012 when the bank started operations, it has been able to grow its activities around financing the real sector of the economy as well as financing and nurturing new companies and industries amidst the challenging business environment.

He said, “Rather than a loan, we give them equity and share in their profits and the downside, if it happens, we also are ready to do that by controlling the risk environment and ensuring that people do not take advantage of that product with the type of discipline through the group arrangement.”

The Jaiz Bank MD attributed the company’s recent positive financial performances to its commitment to customer base to create value and, “share that value between us with very high level of equity around it and that makes them to patronise the organisation the more.”

He said, “We’ve also tried to consolidate and expand to cover many areas of the commercial centers in Nigeria in addition to the fact that with the introduction of the Sukuk, our treasury function has improved because if you know that for more than six years of our life as a bank, we didn’t have instruments to invest our surplus liquidity into until the Sukuk came in 2017.”

He said through a number of initiatives, the bank had been able to grow profits at over 50 per cent annually as well as the size of the organisation which had grown at over 30 per cent within the last three to four years.

The Managing Director further stated that the bank grew its balance sheet by about 40 per cent in 2020 while its risk assets/financing also increased by 54 per cent while customer deposits also grew by about 40 per cent.
He added that despite the adverse impact of the COVID-19 pandemic, the bank experienced a relatively successful year adding that this positive trend had persisted.