The Central Bank of Nigeria: For God or Country?

August 21, 2011

The Central Bank of Nigeria (CBN) has become the epicenter of the nation's reform agenda. Sweeping changes to the way banks are owned and operated have resulted in the prosecution of once-untouchable bank executives for financial crimes. Billionaire debtors have been named and shamed; and fiscal responsibility has become a buzzword for corporations large and small.


In recent times, however, the CBN has found itself embroiled in poisoned debates on the merits of an Islamic banking model. The Islamic banking agenda has resulted in threats and counter-threats by religious leaders on both sides of the divide. This is coming at a time when Nigerians are living fearfully under the shadow of a violent, ultra-religious group that wants an autonomous Islamic nation and when divisive religious and ethnic rhetoric is filling up our public sphere

Islamic banking itself is not a misnomer in secular states (in fact, many developed nations have since incorporated it as part of their national banking policies). The error of judgment in the Nigerian instance is the attempt to insinuate religious constructs and structures like the Sharia Advisory Council into the CBN, a wholly secular, Federal Government establishment.

The Bank of England regulates UK Islamic banks under non-interest banking regulations, and then takes guidance from the Islamic Financial Services Board, a non-governmental organization headquartered in Malaysia. Nigeria is a full member of the IFSB and has access to those same guidelines. There is no reason why the CBN cannot regulate Islamic banking under the previous, non-controversial non-interest banking regulations.

The CBN cannot afford to develop and implement policies in a vacuum, especially when such policies can potentially lead to national instability. The Central Bank of Nigeria must never forget that its allegiance (above any other consideration - politics, economics or religion) is to the Federal Government of Nigeria and all its citizens.