Ja’iza Bank And Re-Capitalization Hurdles

By

Isa Muhammad Inuwa

ismi2000ng@yahoo.com

RE-CAPITALISATION is the current trend that haunts Nigeria’s banking industry the way dreaded computer virus “the Millennium Bug” rattled computer software mongers towards the close of twentieth century, precisely, year 2000 and even more than that. The new banking policy introduced by Central Bank of Nigeria came in a form of a fiat, issued to banks to consolidate their capital bases to the tune of a minimum 25 billion Naira to be raised by each bank before 31st of December 2005.

Apart from the fact that minimum capital requirement fixed by CBN seems too stupendous for majority of the banks that had been meddling with quite meager capital bases, the banks also consider time space allowed within which to meet the requirement as too short. The order is also seen to have come at bad time. Given the current economic condition, the prevailing atmosphere of inflation and diminishing general savings and investments, even the so-called first generation banks possessing more solid capital bases find it difficult to meet requirements of the recapitalisation policy. Some press analysis of the trend indicated that banks based in northern Nigeria are most likely to collapse under this gigantic capital demand than those in the southern part of the country.

While the Central Bank governor, Professor Charles Soludo might have passed the rule of recapitalization in good faith in order to mobilize capital consolidation in the banking sector and thereby boost investment in the sector to further ginger up the general economy, yet the move has caused general panic and different interpretations as to the entire motive behind it. While some opinion lines claimed that Chief Soludo borrowed the idea from Malaysian experience of rapid capital mobilization for their “bank Negara” others pointed the CBN governor was doing the bid of Mr. President who was envied by South Africa’s capital edge in banking and wished similar fortune for Nigeria. What ever the case may be, it is observed that recapitalization trend was introduced without due consideration of cultural, cum environmental peculiarity within which Nigerian Banks operate. Worst still, the Central Bank and other authorities seem not only bent on their intention to implement the policy, but also ready to cage any bank official that opposes the measures,as wrath had already visited such bank officials.

Ja’iz Bank is a budding bank just freshly in the process of its take off but faced with the formidable snags of “:recapitalization”. Since about two years after public sales of take-off shares of the proposed bank, this policy has held the nestling bank in the neck and still unable to obtain license to start operation. At the Annual General Meeting of the proposed bank on February 20th in Kano, principal proprietors complained bitterly over lingering delay to secure operation licence, even in addition to their modest request to meet the required capital ceiling the start of operations. With its 2 billion naira already pooled up by subscribers which is quite an appreciable amount in contrast to other old (established) banks whose capital mainly stands at merely 1 billion naira or even less, principal stakeholders of Ja’iz bank vowed to mobilize more fund to be able to fulfill recapitalization requirements given enough time and leverage.

First and foremost, Ja’iz bankers opted to resort to legal arguments with a view to find their way out of the quagmire within the available legal provisions and dictates of banking operations. Another poser for Ja’iz subscribers is to liaise with legislative arm of government with a view to chip in new laws and regulations facilitating ways in the imposed recapitalisation policy.

However, the third major alternative is to evolve gigantic campaign for new subscribers, this time around in a bigger style and biding huger amounts of capital to big time investors in order to conveniently beat the stipulated benchmark. Ja’iz Bank subscribers are never daunted. One important thing about Ja’iz Bank is that it would be interest-free throughout its operations, almost unprecedented in the history of banking in Nigeria. So it would definitely command great attention and draw curious investors to its tent.

The concept of “Ja’iz” meaning “Halaal” is drawn from similar banking experience in Bangladesh which had equally faced even more grievous daunting challenges at the moment of its take off, but ultimately weathered the storms. Hence spurring comments by Dr.

Lateef Adegbite charged investors to look beyond mere material dividend accruable but also see it a sense of moral sacrifice towards establishing and sustaining an interest free-bank. As experience has shown, the banking system by Ja’iz does not restrict clientele to any particular group people or religious followers, its peculiar nature and mode of generating profit in a much liberal and fair way calls for all categories and cream of subscribers to pool up resources jointly towards realizing a much dignified banking transaction, profit making and sharing system as spearheaded by the bank.

As we all await for the final decision and action of the Central Bank of Nigeria in its recapitalisation policy we say more grease to Ja’iz elbows in its battle of legitimacy towards coming of age in Nigeria’s banking terrains.

Isa Muhammad Inuwa Corresponden Radio Deutsche Welle.

Radio Deutsche Welle El-mail: ismi2000ng@yahoo.com