Islamic Banking and Finance: An Imperative For Sustainable Development in Nigeria

Abstract

This paper tries to explore the Islamic banking concept (non interest banking) as an alternative and viable system that can achieve sustainable development which the 21st century demands. Islamic finance has grown rapidly over the past decade, and its banking segment has become systemically important in most countries in a wide range of regions. Islamic finance is projected to continue to expand in response to economic growth in countries with large and relatively unbanked Muslim populations. It is also fueled by the large savings accumulated by many oil-exporting countries that are seeking to invest in Shari’ah-compliant financial products. The transformation of the society and the world’s economy on a sustainable basis is one of the most significant challenges in the 21st century. This implies that one of human kind’s greatest challenges in this century is to ensure sustainable, just and balanced development because the needs of the current and future generations cannot be met unless there is respect for natural system and protecting core economic. Islamic banking and finance with a unique feature of profit and loss sharing paradigm is conducive to a dynamic economy in which the benefits of growth are shared by the community at large. This paper therefore provides an in-depth and insights on the concepts of Islamic banking, rationales for prohibition of interest in Islam, Islamic banking financial instruments and the place of Islamic banking in achieving sustainable development. It is therefore recommended that the numerous advantages accrued to Islamic banking and finance practices which constitute an integral part of the financial development strategy should be encouraged and mainstreamed to meet need for sustainable development which the 21st century demands.