ISDB to Release $150m for Nigeria’s Agro-industrial Sector

James Emejo in Abuja

The Islamic Development Bank (ISDB) said it prepared to release the sum of $150 million for the development of Special Agro-Processing Zones in the country.

This is as former Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, called for an effective legal and regulatory framework that would enforce the legality of finance contracts and ensure Sharia compliance in order to reap the benefits of Islamic finance.

The Vice President, Country Operations, ISDB, Dr. Mansur Muhtar, said this while speaking during a panel session at the 5th African International Conference on Islamic Finance.

He said the money would be released in a matter of days.

Speaking on “Infrastructure Financing, Sustainability and the Future of African Markets”, Muhtar said Islamic finance offers several features and practices that could support infrastructural growth in the country.

He said, “Islamic banking is asset backed and based on participation and risk sharing, we also have to look at other elements which are the social and environmental sustainability that are consistent with Islamic principles of supporting infrastructure,”

“At ISDB we focus on projects in social and fiscal infrastructure, to implement these projects we place a lot of emphasis on regional connectivity.

“For example, in Nigeria in the next couple of days, the ISDB will be making a contribution to a project that is aimed at supporting the development of special agricultural processing zones and we will be committing $150 billion. We have also been involved in several other projects in Nigeria.”

In September, the African Development Bank disclosed that it was collaborating with other multilateral organizations to finance with the sum of $520 million the first phase of Special Agro-industrial Processing Zones in some selected states across the country.

He called for an effective legal and regulatory framework that will enforce the legality of finance contracts and ensure Sharia compliance in order to reap the benefits of Islamic finance.

Sanusi said: “Regulators especially in the banking, capital markets and insurance have been quite responsive to this development, through creating the enabling environment, facilitating its integration into the mainstream financial sector and generating awareness to achieve higher level of its acceptance, and thus higher level of financial inclusion.

“Going forward, there is a need for more collaboration between regulatory authorities to grow the industry, as well as more awareness generation and more professional development for effective and efficient operation of the institutions in order to instill and maintain stakeholder confidence and achieve optimum performance.”

He urged the CBN to continue with its initiative of developing non-interest liquidity management instruments especially short-term papers for non-interest banks.

Without these in the market, he said, the possibility of creating a non-interest inter-bank market is very slim, which will impact negatively on the profitability of the institutions.

Also, speaking on impediments to the model in Nigeria, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed said, “One of the impediments to the development of Islamic finance is the notion that Islamic finance is just for Muslims.”

To combat this, she advocated for the establishment of comprehensive operational frameworks for Islamic financial products and services and increased awareness of these financing options to the real sector.