Further discussions on Islamic Banking

Kolawole Adegoke wrote A. Ajtunmobi on  27/07/11 3:17 PM

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Dr. Ajetunmobi converted Mr. Adegoke’s mail into different parts as questions and answers them in a way that makes the subject less tedious for all, including two interesting angles to Mr. Adegoke’s mail:  creation of employment by the new Islamic banks AND the usual tendency of the Nigerian to leave things and wait and see what happens.  Mr. Adegoke did not suggest the other usual tendency: to leave things to God to eventually sort out.

This contentious new banking system which is already raising hell along Christian/Muslim divide in other Nigerian forum seems hell-sent to add to Nigeria’s unending problems.  Is it a ploy to divide the South with its majority Christian population by the North with its majority Muslim population? Or, as being written in newspapers, one of the North’s ploys to Islamize the country?  After all, it is wel-l known that in the Yoruba Southwest, there is generally unity between both adherents of both religions as many families have members in both.

On Wednesday and Friday, this Blog will carry two more submissions.  Please read on.  Tola Adenle.

Dear Mr Kola Adegoke

I read with considerable interest your recent comments sent to me about my earlier article on Islamic banking. At your request, I’ve decided to intersperse these comments (in italics and headed Kola) with my response (headed My Response) below. I shall however take your liberty to share this interspersion with a few other people who may be interested in it. If you find this objectionable, I do apologise for that.

Kola
What a good observation you have been able to make about bringing the above mentioned bank into being. Whether the unborn bank would render the same services as the existing ones or not, definitely it provides employments for Nigerians irrespective of their faiths. By so doing improving the economy, what is your view about this?

My Response

You’re right, Islamic banking may potentially provide “employments for Nigerians,” but such provision looks suspiciously like the end justifying the means. And that, as every ethics textbook tells me, is immoral. The means should always be proportional to the ends, and that Islamic banking must not give a false statement of fact, misrepresenting itself as interest-free bank to induce its clients or provide jobs for those working inside it.

Leaving aside the dialectical polemic about what constitutes riba (commonly translated as interest) – there is no one ‘Islam’ in Islamic banking -, the Qur’anic prohibition ofriba which supposedly underpins Islamic banking operations, indicates a repudiation of any addition to the principal. But, the “fees,” “mark-ups,” or “commissions” charged by Islamic banking for usage of the capital provided by it are all additions, and lexically therefore, they all fall within the domain of supposedly prohibited riba. Remember, all banks have utility bills, rent, salaries, and other expenses to contend with. Unless it can be proved that when I borrow money from an Islamic bank to invest in business or other economic activities, I’ll end up paying the same as I would pay if I were to make the payment in full at the beginning of the transaction, it is justified to regard Islamic banking as a Trojan horse concealed to induce gullible Muslims. Calling Islamic bank interest-free, even though the bank is virtually synonymous with interest-based, is like calling fornication ‘making love.’

Of course this may afford the comfort of euphemism, but using euphemistic language is as likely to be the product of confusion as of design – especially when it concerns ethical dilemmas that fall within the realm of private as well as public behaviour.

Kola
Within the last one year also, Nigeria has become unsafe for any foreign investors, must you criticize this proposal by your fellow Nigerians or is it a crime doing this?

My Response

Without being immodest, I am always guided in my writings by three essential Cs of criticism, to be comparative, contextual and constructive. In view of material misrepresentation of Islamic banking practices and the consequences that may result therefrom, I do not accept that, on the basis of perceived foreign investors’ sensibilities, Islamic banking in Nigeria should be placed beyond rigorous analysis and criticism. Remember, Western democracy too is qualified by criticism. And currently, the British and American democracies are both being battered by criticism from their subjects for falling short of democratic ideals, notably in handling accountability and checks on executive power. Any society that wants to be vibrant and progressive should not fear constructive criticism; rather it should welcome it. Only by accepting and evaluating criticism will its leaders (and subjects too) be able to discover the extent of their own self-deception. Is it a crime for Islamic bank to give a false representation or account of its practices? You decide for yourself.

But in law, an actionable misrepresentation is a false statement of fact, though not opinion or future intention, made by one party to another to induce the other party to enter the contract.

Kola
Furthermore, those employed will not depend on others to live again and it increases Governments incomes thereby jerking up developments.

My Response

Again, it is possible that Islamic banking in Nigeria may offer a glimmer of good news to “those employed” by it, but that cannot be made an excuse for deliberate, opportunistic practising of deception. As stated above, the accpetance of Machiavellian principle that the means permitted should be judged solely on the short-term attainment of the end one reaches is not only precarious but empty of moral value. Think about it, what relationship, economic, personal or political can be preserved when no one observes basic moral principles (like keeping promises) in order to attain those ends? In the country today, there are underlying challenges of frustrated hopes, corruption of politicians untrammelled by EFCC or electoral mandates, rising unemployment and miserable status of many Nigerians. The best way to help the growth prospects of the country is to improve its infrastructure. Investment in infrastructure public projects will provide direct benefits and also increase the long-term growth potential of the economy far better than the creation of Islamic bank which already is attracting polarised feelings in the country.

Kola

And, mind you, you cannot tell that a pregnant she-goat will deliver male or female offspring.

My Response

That statement is not accurately correct. For instance, using ultrasound machines (e.g. easi-scan portable bovine scanner), it is possible now for the vets and farmers to detect goat pregnancy within a few days of gestation, an embryo’s viability at just days again and the sex of the foetus at around two months. In the context of Islamic banking however, I think my article seems to act in the manner of placing ultrasound probe over the reproductive tract of a goat, thereby providing a worked example of what goes on ‘inside the womb’ of Islamic banking, and thus making it possible for us to gain more understanding of its practices and the implications of its establishment in Nigeria.

Kola
In a nutshell, i suggest let us see what happens next. We shall live to witness the results.

My Response

There is a potential danger in folding our hands and waiting around to “see what happens next.” To me, we need to be wary of what is termed “Macduff loophole” - so-called because of its similarity to the witches’ riddle about the origins of life in Shakespeare’s Macbeth. Here, the Scottish king thought that he was safe after the witches predicted that “none of woman born shall harm Macbeth,” but sadly was killed by Macduff, who had been “untimely ripped” from his mother’s womb. You see, there are out there many worked examples on Islamic banking which can help advance our understating, and hence allow us to predict the type of ‘child or children’ to be ’born’ by it in Nigeria. So, why wait around then “to witness the results”? Indeed, worked example, as Sweller remarks “is the best known and most widely studied of the cognitive load effects” since it can “provide us with an effective instructional procedure … [and] throw light on the very foundations of human cognition.” (Sweller, John (2006) “The Worked Example effect and Human Cognition,” Learning and Instruction 16(2): p. 165).

Anyhow, thank you for letting my know of your perception about my article. I shall however be ready to consider a refutation of all or any parts of the above responses

Best regards, A. AJETUNMOBI