Is religion (interest) an impediment to Nigeria’s financial inclusion targets by the year 2020?: A qualitative inquiry

• Published in: Qualitative research in financial markets 2020-01, Vol.12 (3), p.283-300
• Main Authors: Umar, Umar Habibu, Ado, Muhammad Bilyaminu, Ayuba, Habibu
• Format: Article
• Language: English
• Subjects: Adults; Banking industry; Central banks; Consumer protection; Cost control; Deposit insurance; Finance companies; Financial inclusion; Financial literacy; Financial services; Islamic financing; Literature reviews; Microfinance; Muslims; Pensions; Population; Religion; Small & medium sized enterprises-SME
• ISSN: 1755-4179; 1755-4187
• DOI: 10.1108/QRFM-01-2019-0010

PurposeThe purpose of this study is to establish whether religion (interest) is an impediment to Nigeria’s financial inclusion targets to be achieved by the year 2020.Design/methodology/approachThe data were collected through semi-structured interviews and documentary evidence. Thematic analysis was used to analyze the interview responses.FindingsIt was found that all the Central Bank of Nigeria (CBN) programs that contribute toward achieving financial inclusion are interest-based ones. Further, none of them provides a non-interest window except Commercial Agricultural Credit Schemes (CACS). Even the CACS is not fully Shari’a-compliant, as it requires further modification. Despite the fact that interest is condemned in Islam, a majority of Muslims have been found to be accessing interest-based funds. Hence, interest is not a factor that hinders the achievement of reducing Nigeria’s financial exclusion rate to 20 per cent by the year 2020.Research limitations/implicationsThis study inquired into the programs under the Development Finance Department of the CBN by using semi-structured interviews and documentary evidence. Other programs of the federal government, state governments, NGOs and other private organizations and individuals are not considered. The findings have pointed out the areas to conduct future studies on religion and financial inclusion.Practical implicationsAlthough Muslims who complained about interest are a minority, there is the need to provide non-interest windows in the programs before they start shunning these programs, as a lot influential Muslim scholars are currently preaching against the interest.Originality/valueThe paper is one of the few studies that support the view that interest does not hinder the achievement of financial inclusion in a Muslim majority country.