Management in Jigawa State, Nigeria
1Baba Uba Ibrahim, 2Ahmad Azrin Adnan, 3Kabiru Uba Ibrahim 1Sule Lamido University, Kafin Hausa, Jigawa State, Nigeria
2Universiti Sultan Zainal Abidin, Malaysia
3Jigawa State College of Islamic and Legal Studies, Ringim, Jigawa State, Nigeria
Abstract: Islamic Wealth Management is being recognized worldwide, adopted by Muslims and even some non-Muslims globally. Nevertheless, Jigawa State seems to be outdistanced in this regard, despite the fact that it is a Muslim dominated society. Hence, the paper aims at pointing out the potentials for such a Muslim community to strive in actualizing, formalizing and implementing the system in their economic activities and proposing on overcoming the challenges thereof. The study adopts a qualitative approach using a descriptive survey design and document analysis method to analyze relevant literature and identify the challenges of the implementation in Jigawa State, Nigeria. The study found out that there are a lot of challenges which need to be tackled with public awareness on the importance and benefits of the system and the religious obedience in the practice and also the actualization of proper and relevant regulations and regulatory bodies in compliance with the Shari’ah. The study recommends that authorities ought to endeavor to address the national administrative difficulties. Also the open doors flourish for the development and advancement of Islamic wealth management in Jigawa State, Nigeria should be emphasized.
Keywords: Islamic Wealth Management, Shari’ah Compliance, Jigawa State, Nigeria.
Introduction
Islam reached West Africa at an early stage, before and during the eighth century of the Hijra Calendar, through trade and commerce from North Africa which helped in the spread of Islam to most parts of the region. It was reported that in Nigeria, Islam was introduced to Kanem Bornu during the 11thCentury, and was brought into Hausa land during the 14th Century by traders and scholars coming from North Africa down through Mali (Oloyede, 2014).
The milestone of the spread of Islam into Northern Nigeria was the Jihad of Usman bn Fodio, a Fulani man that waged his jihad to purify Islam and eradicate idol worship and make it free from all kinds of distortion and heretical innovations. Oloyede, (2014) indicated that the Jihad did not only revive the teachings of the Qur'an and Sunnah, it was also political in the sense that it was able to unify the Hausa States under the Sokoto Caliphate administered by Shari'ah Law.
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All activities of the Muslims under Northern Nigeria (the then Sokoto Caliphate) including financial transactions continued to be observed under the Islamic Shari'ah Law until the partition of the Caliphate in 1903, when the region was thereafter incorporated into Nigeria, under British colonization and its indirect rule, whereby some aspects of the Caliphate structure were retained and used in the colonial era.
With the Western influence gradually the Western culture as well as the Western financial system were introduced to either replace or overcome the Islamic financial system formally adopted, to the extent that most of the Muslims have got used to the interest based system, and have no awareness on compliance of the Islamic financial rules and regulations.
Despite the fact that Islam does not see the aggregation of wealth adversely, but rather it does as such disapprove of inordinate amassing of riches in the hands of a few. The zakat charge framework, which viably redistributes riches from "those who are well off" to "the poor," is one of the five mainstays of Islam. Legacy decides additionally guarantee that wealth is equally shared among the Ummah. Islam necessitates that Muslims look to secure continuing and charming wealth; accordingly, it urges Muslims to work and acquire a real salary for themselves and their families and entreats each Muslim to endeavor to accomplish flawlessness and magnificence in his or her picked calling. Consequently, the acts of Islamic wealth management join the creation, improvement, insurance, conveyance, and refinement of wealth (Shanmugam & Zahari, 2010).
A lot of Muslim countries and others have adopted the modern Islamic Wealth Management, and is being developed and practiced globally, but unfortunately the Muslims with their large population and domination in the Northern part of Nigeria and precisely in Jigawa State have been outdistanced in its implementation. Hence, the need arises for drawing attention on this regard. Therefore, this paper points out the importance of awakening the Ummah in this part of the Muslim world to join their counter parts in Islamizing their financial transactions, thereby pleasing their Lord by avoiding the prohibited interest based system and getting the blessings that would move them forward and enhance their standard of living.
Literature Review
Islamic Wealth Management
Wealth is a collection of things limited in supply, transferable and useful in satisfying human desires, while management is the administration of an organization, whether it is a business, a not-for-profit organization, or government body. It includes the activities of setting the strategy of an organization and coordinating the efforts of its employees or volunteers to accomplish its objectives through the application of available resources, such as financial, natural, technological and human resources. The term "Management" may also refer to the people who manage an organization.
The objective of Islamic Wealth Management is to ensure that a person's wealth is managed by the way that a better return of investment would be improved through all sorts of investment tools approved by the Shari’ah Law. It is an important aspect of Islam, since Muslims are required to manage wealth in accordance with the Islamic legal system, owners are just keepers and not absolute owners of the wealth, which Allah is the actual owner. As such Islam promotes the doctrine that everything in this universe, including wealth, belongs only to Allah, and creatures are just trustees of the resources in this world.
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"To Him (Allah) belongs all that is in the heavens and all that is on the earth and all that is between them, and all that is under the soil" (SurahTaha:6)
It is permitted in Islam to accumulate wealth with good intentions such as: Providing for the family what would cater for them after his death, helping the needy and using the money for making positive contribution to the society. This act is not just permitted but would actually be rewarded. Allah prohibited for wealth to be left in the hands of the un-wise in order to save it from being wasted:
"Give not unto the foolish (what is in) your (keeping of theirs) wealth Allah hath given you to maintain; but feed and doth them from it, and speak kindly unto them" (al-Nisa’: 5).
Allah also said:
"If you find them of sound judgment, deliver over onto them their future" (al-Nisa’: 6).
A lesson was learnt from the Prophet (PBUH) on saving wealth for one's dependents and not to be squandered away, when he visited Sa'ad bin abi Waqas, who was sick, at Mecca. He asked the Prophet (PBUH) if he could in his would give away all his property as charity, but the Prophet (PBUH) said "No". He then said if he could give half, and the Prophet (PBUH) said "No". Then he said if he could give one third, and the Prophet (PBUH) replied: "Yes", and remarked that "one third is too much, it is better for you to leave your inheritors wealthy than to leave them poor and begging others".
Narrated by Sa’ad bin abi Waqas: I fell sick and the Prophet (SAW) paid me a visit. I said to him, "O Allah's Apostle (SAW)! I invoke Allah that He may not let me expire in the land whence I migrated (i.e. Makkah)." He said, "May Allah give you health and let the people benefit by you." I said, "I want to will my property, and I have only one daughter and I want to will half of my property (to be given in charity)." He said," Half is too much." I said, "Then I will one third." He said, "One-third, yet even one-third is too much." (The narrator added, "So the people started to will one third of their property and that was permitted for them.") (Al-Bukhari: 53).
We can realize that Islam intends for wealth to be employed for productive purposes in the economy in line with what is permitted, through fair and honest dealings.
The historical root of the Islamic Wealth Management (IWM) could be referred to the basic concepts of wealth in Islam which relates to different types of products of Islamic finance and general planning process. The five necessities that are considered basic and necessary for human existence of which is the duty of every community to protect and preserve, are identified in shari’ah as: property, life, religion, intellect, and progeny. Therefore, the need for explaining how wealth could be managed in compliance with shari'ah should be emphasized upon (2016, February 26, Insight Report, p.7).
Management of wealth and Finances in Islamic economics consist of wealth creation in businesses, savings and transactions in financial institutions, trading, professional services, generating returns from wealth enhancement, wealth protection by managing risks, trusts and takaful, and wealth distribution in forms of gifts (hibah), trusts and wills. Islamic Wealth Management engages in making available services and products that are within the cycle of wealth management in compliance with shari'ah. Some of the activities include: financial analysis, planning of investments and monitoring of ongoing investments, planning of real estate, and shari'ah compliant securities and assets selection. Therefore, the services are completely based on shari'ah (Insight Report, February 26, 2016, p.5).
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According to Chapra (2001), Islamic teachings and provisions could be considered in the framework of the contemporary Global Economy. The norms and provisions in Islamic teachings and literature of Muslim writers considered promoting justice so as to achieve the need for integrating the economies of the present world. However, leaders of the Muslim countries have to strive harder to introduce justice in to the economies and provide more solutions that would make them succeed in overcoming the globalization challenges.
Farooq (2014) contended that the dimension of centralization of wealth at both national and worldwide dimensions is identified with the western system of managing wealth, whereby that can be seen having a loose predisposition. Islamic system of managing wealth in its present practice is to a greater amount of a limb to its ordinary partner, being from a positive-whole viewpoint. Which means; certified managing of wealth does not need to be comprehensively to the detriment of others.
The present dispensation to have some Northern States’ Governors trying to implement the Shari’ah Legal system in their states is encouraging. But the problem is that some of them have politicized the issue (Ibrahim, 2016).
Even though, the above mentioned studies highlighted on the spread of Islam in the area and the effect of the British colonialism on the commercial activities after the fall of the Dan Fodio Caliphate that was practicing shari’ah, the studies did not provide a clear picture on how wealth management under shari’ah went on before, during and after the colonial era which this study aims at highlighting on.
Despite the fact that Jigawa State, which is situated in the Northwestern part of Nigeria, has a large Muslim population of over ninety percent (90%) of its citizens, and even the civilian Governments of the State have been practicing Shari’ah legal system since the regime elected into power in 2003, but unfortunately a systematic modern Islamic Wealth Management is not being implemented in the State.
Islamic Wealth Management in Nigeria
Sanusi (2011) gave an account on the issues and challenges of Islamic Finance in Nigeria discussing the concept of Islamic Banking and Finance, mentioning that its principles are based on the avoidance of interest, uncertainty or ambiguity relating to a subject matter, excessive speculation and unjust enrichment or unfair exploitation and greed. Highlighting on the instruments and modes of finances, he mentioned short clarifications on; Musharakah (company), Murabaha (cost-in addition contract of sale), Mudharaba (joint venture), Salm (forward contract in trading), Ijarah (rent), and lstisna' (joint venture in production). He also gave an overview of the Islamic Wealth Management growth and Global development, whereby various global Islamic institutions of finance ascended from just one establishment in 1962 to in excess of 435 fully-operating, and 191 windows from interest-based organizations are working in more than 48 nations, with Bahrain, Malaysia, and the UK being worldwide center points and sparkling precedents. On the development of the concept in Nigeria, the study emphasized that the Islamic Banking sector of the Islamic Finance Industry is receiving the attention of most promoters in Nigeria. Mentioning that the evolution of modern Islamic Banking in the country is dated back to 1991 with the enactment of the banks and other financial institutions Decree, which recognized banks based on profit and loss sharing.
Investors started applying for banking license to operate Islamic Banks, between 1993 and 1995, but until 1996 that Habib Bank Plc, was licensed to open a non-interest banking window, offering a limited number of Shari’ah-compliant products. By the year 2004, demands for the
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establishment of full-fledged non-interest banks continued from interested investors, whereby an Approval-in-Practice (AIP) was granted to Ja’iz International Plc.
Umar (2011) defined Islamic Finance as a financial system that offers products, services and financial instruments based on the Islamic law (Shari’ah). He also described the Islamic Wealth Management facilities available on ground in the country at that time as being only; Ja’iz Bank - Islamic Banking, and Stanbic IBTC – Non-Interest (Islamic) Banking Window. Concerning Islamic Insurance (Takaful) there were Takaful windows in Africa Alliance Insurance Plc, Niger Insurance Plc, and Halal Takaful, a division of Cornerstone Insurance Plc. Then on Islamic Capital Markets, there were: Lotus Capital Plc. and Halal Fund of ARM. But none of the above was available in Jigawa State.
Some of the differences between Islamic Finance and Conventional Finance to be; Interest-based financing, Interest-Interest-based deposits, Interest-bearing securities on investment products and Penalty on default, in the Conventional Finance. While in Islamic Finance there are:
Restrictions by dealing only in lawful goods and services, prohibition of Speculation (Gharar) and Gambling (Maysir), financing is not interest-based but is asset-backed and based on generating a profit from sale of an asset or its usufruct. Deposits are not interest-based but based on profit and loss sharing or as interest-free loans, investment products are asset-backed investment products like Sukuk (Islamic bonds) and other shari’ah-compliant investment certificates, as well as Shari’ah Supervisory Board (Umar, 2011).
The above studies did not give special consideration on Jigawa State, and apart from not being specific on Islamic wealth management, most of the findings thereof also need to be updated.
This study takes that into consideration and puts more emphasis on Islamic wealth management in Jigawa State.
Implementation Challenges in Jigawa State, Nigeria
Duriat (2015) opined that the reality and challenges of Islamic Wealth Management in Singapore, could serve as lessons to the Nigerian case, so that it would benefit from the experiences. The study established that Singapore cannot be a complete international financial center unless Islamic financial services are offered and anticipated that Singapore can become the overall number one wealth management capital by 2020.
Bello and Abubakar (2014) examined the challenges and solutions to Islamic banking system in a Pluralistic - Secular Country like Nigeria. Utilizing a content analysis strategy, the investigation revealed that the difficulties that may go up against Islamic finance in Nigeria are of two kinds; operational and institutional. The operational difficulties are posed as religious and social contrasts, absence of advancements in the finances, absence of benefit sharing fund, shari'ah related issues, deficient labor with the essential information, absence of mindfulness and rivalry, while the institutional difficulties are: unseemly institutional system, insufficient lawful structure, absence of value organizations, poor supervisory system, dissimilarity in bookkeeping standard, absence of auxiliary financial markets and absence of transient financial instruments and foundations.
Notwithstanding these difficulties, Islamic finance will make progress if and just in the event that it can address these difficulties equitably. The discussions prescribed that; the three arms of government should address the issue of building up and activity of Islamic banking and finance in Nigeria equitably. The Central Bank of Nigeria should utilize all media conceivable to illuminate the majority on the requirement for Islamic finance and its goals in Nigeria. There
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ought to be an incorporation of laws that will give Islamic finance avenue to work in the stock exchange and be covered by the laws of country. At that point, religious bod ies (Muslim and Christian) should be associated with people in general struggle for the foundation of Islamic finances in Nigeria. In addition, the legal executive ought to satisfactorily address this issue without dread or support since it is accepted by the constitution. At last, Nigerians ought not to be one-sided about this foundation based on their social and religious contrasts..
Gumel, Yusha’u and Ali, (2017) using both descriptive approach and inferential approach and chi-square statistics analysis on Islamic banking institutions in a non-Islamic economy, found that Jaiz bank is the main full fledge non-usury bank yet at the same time the bank is confronting various obstacles as far as control, individuals' support and rivalry with the completely settled traditional banks in the nation. The bank is therefore ought to be serious labor preparing and advancement in the field of Islamic finances in the nation to give legitimate Islamic financial transactions.
Gumel and Sani (2016) utilized a conceptual approach to discover how Islamic banking and finance products and service could be used as options and feasible methods for Small and Medium Enterprises (SMEs) financing in Jigawa State. The study identified the structure of Jigawa State economy as largely a public sector led Economy, even though with a great untapped potentials of significant growth in the private sector, especially in the aspect of Small and Medium Scale Enterprise (SME). They found that Islamic Banking products are helpful in SMEs financing. Nonetheless, there is no single fully financial institution that offers Islamic financial services, hence the need for solid approach activity that would achieve the foundation of Islamic financial institutions, particularly Islamic microfinance.
Methodology
The paper utilizes the secondary data generated through library materials for the purpose of literature review. A qualitative approach was adopted in the study using a descriptive survey design, by which the phenomenon was studied. The document analysis was used in analyzing the data collected. It was also used in the literature review and precisely dominated the sources used in obtaining the findings highlighted upon in the discussions.
Findings and Discussions
It is very clear how important Islamic Wealth Management could be to a Muslim dominated state like Jigawa State of Nigeria, which when implemented properly would drive a lot of benefits to the state and the country in general. As outlined by Umar (2011), some of the benefits of Islamic Financial Services on the Nigerian Economy, especially Jigawa State, include:
i. Financial market developing: modern markets and new institutional players will be presented e.g. Islamic resource the board organizations, Takaful, Islamic Money Market, and so on.
ii. Financial Inclusion: a substantial number of Muslims in the nation that had until now controlled far from the current financial system because of their abhorrence for usury and its based operations will be incorporated into the formal financial division, which will, thus, lead to the supplanting of casual markets with the ones that are formal and regulated.
iii. Enhanced items; offering from a variety of advantage supported instruments backed by assets, as options and supplements to the interest-based ones.
iv. A new rivalry in the financial industry; is relied upon to cause an attending decrease in interest charging.
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v. Enhanced oversight and control through an additional segment of corporate administration, which is the Shari'ah supervisory board/advisory group.
vi. Enhanced interest in the basic segments of the economy; utilizing Sukuk as another instrument of financing.
vii. Development of the genuine segment of the economy could be through its benefit supported financing which will bring subsidizes and just to profit generation and genuine investment operations.
Therefore, it is very essential to implement the Islamic wealth management system in Jigawa State in order to achieve these benefits and beyond. That would also give the Muslim community in the state an opportunity to join the Muslim world in actualizing, formalizing and implementing the system in their economic activities which would elevate their status in the world and the hereafter.
However, some of the challenges that have to be addressed for the successful introduction and operation of Islamic Wealth Management in Jigawa State, Nigeria, as indicated by Sanusi (2011), could include:
i. The dearth of information, abilities and specialized ability to control, and manage the framework.
ii. Lack of shari'ah-agreeable liquidity board instruments. Islamic banks can't put their abundance liquidity in usury based instruments, which are the liquidity board instruments in the market, which places them at a focused disservice as for their traditional partners.
Additionally, the current market in-between banks and the instruments utilized by the Central Bank for financial approach activities are all usury based with no proportionate government securities or other currency showcase instruments that are shari'ah-agreeable, which are all fundamental to stay away from a liquidity bottleneck for Islamic banks when they come into a task.
iii. Islamic insurance (Takaful) has recently begun and there is a requirement for more, in order to ensure the investments of Islamic banks against unexpected perils and encourage the development of the business individually. Firmly associated with this test is the absence of store protection conspires for the assurance of contributors to Islamic banks.
iv. Lack of information on bookkeeping and reviewing norms relevant to Islamic financial organizations. The finance record structure of Islamic banks is one of a kind, and despite the fact that crafted by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) on bookkeeping and evaluating norms for Islamic banking items is accessible, there is the need to prepare ordinary bookkeepers and evaluators in the use of the principles.
v. Lack of a strong and thorough lawful system, particularly at the dimension of arbitration of contentions including Islamic back contracts, items or elements.
vi. In the release of its conventional job of moneylender after all other options have run out, the CBN gives credits to banks now and again of the liquidity crunch. Islamic banks can't truly profit by such an office in light of the fact that such assets are normally given based on usury. There is thusly, the need to devise and execute an intrigue free system for such help.
vii. The dearth of shari'ah researchers learned in traditional financial matters, law, bookkeeping, keeping money and fund, which places extreme requirements on the administrative shari'ah-compliance system.
viii. Double tax assessment that would be imposed on Islamic banks because of stamp obligations and capital increases charge that is deductible upon resource exchange. Islamic banks confront a gigantic test in this regard on the grounds that their money-related