Challenges and solutions to islamic banking system in a pluralistic-secular country like Nigeria

Abstract

The objective of this paper is to assess the challenges that the introduction of Islamic banking in Nigeria may face. It is also aimed at providing solutions to these challenges. In doing this, the study resolves that the challenges that may confront Islamic banking in Nigeria are institutional challenges such as inappropriate institutional framework, inadequate legal framework, lack of equity institutions, poor supervisory framework, disparity in accounting standard, lack of secondary financial markets and lack of short-term financial instruments and institutions. The operational challenges in the form of religious and cultural differences, lack of innovations in financial products, lack of profit sharing finance, shari'ah related issues, inadequate manpower with the requisite knowledge, lack of awareness and competition. In the presence of these hurdles, the study concludes that the proposed Islamic banking in Nigeria should take the bull by the horns in order to overcome these challenges.