Nigeria’s central bank has issued guidelines for an advisory body that will oversee Islamic banking in the country, becoming the latest regulator to opt for a centralised approach to the industry.
Nigeria is home to the largest Muslim population in sub-Saharan Africa with over 80 million Muslims, and authorities are trying to establish the country as the African hub for Islamic finance.
Traditionally, Islamic banks have practiced self-regulation when ensuring that their products follow religious principles. But a centralised model of supervision is increasingly being favoured across much of the world.
Countries including Bahrain and Morocco have opted for such a format, which can help to limit differences between products, speed the design of new products and boost investor confidence.
Nigeria’s advisory body, known as the Financial Regulation Advisory Council of Experts, will be tasked with ensuring all banking products that are designated as Islamic conform to sharia principles.
The guidelines, published on Friday, set out minimum requirements for the advisory body, which will comprise a minimum of five members including a central bank official. Members will serve renewable two-year terms, must be qualified in Islamic jurisprudence, and are restricted from working for any other financial institution supervised by the central bank.
Financial institutions that offer Islamic banking products in Nigeria are already required to have their own boards of sharia finance experts, who are limited to serving in one institution at a time.
The central bank’s advisory body will be guided by the principles of sharia governance issued by the Malaysia-based Islamic Financial Services Board.
*This article was originally published on The Africa Report on 23 February 2015. Read the original article here.