Commentary: Islamic banking in West Africa, bleed over with extremism

Commentary by | Charles Nwoke

March 11, 2021 

Due to the security crisis in Nigeria, some quoted speakers names have been omitted from the record. 

Image of Nigeria local bandits courtesy of Nigeria local sources, fair use. 

In the last decade, growth in non-interest banking and finance has been unprecedented, which is actually what Islamic Banking stands for globally. The existence of Islamic finance has become very significant in many sectors of the world economy and it is expected to continue to spread given the economic growth of the member countries, especially the Muslim populated country. Nigeria is home to the largest population of Muslims in sub-Saharan Africa.

Nigeria, in similar fashion to most other Muslim African countries, has had their fair sharing of the benefits accrued to this organization, and on the other hand; these countries in Africa, have directly or indirectly benefited from untold hardships, violence, and destruction of lives and properties orchestrated by Islamist extremists, both known and unknown sects in the name of fighting jihadists wars.

While some persons are finding it extremely difficult to agree that Islamic Banking contributes to the spread of Islamism in Africa, especially among the Muslim Umars, others believe Islamist finance is the major sponsor and source of funds and weapons for Islamist radicalism, extremism, and jihadists wars across the continent.

Nature of Islamic Banking
Islamic finance is a financial institution that is established on adherence to the Sharia or Islamic law. It provides services, products, and equipment based on compliance with this Divine Law and dictates of Sharia law.

Sharia law forbids the payment or acceptance of interest charges (riba) for the lending and accepting of money, as well as carrying out transactions considered contrary to its principles. Money in Islam is not valued as an asset from which one is ethically allowed to earn a direct return. Money is typically seen as a medium of exchange.

There is no real ‘borrowing’ in Islam since all ‘lenders’ obtain ownership interests in their assets, or earn a profit-share or purely fee-based gratification. For an Islamic bank to earn a return on money lent, it is necessary to obtain equity or interest in a non-monetary asset; which entails that the lender will partake in the risk-sharing.

Do Islamic Banking-finance or sponsor terrorism and Islamic extremism in Africa?

International Monetary Fund (IMF) has emphasized the risk factors associated with Islamic banking and finance’s lack of common understanding of money laundering and funding terrorism.

There are unknown risks and issues involved in Islamic Banking, especially among Africans. These risks are a result of the complexity of Islamic finance and products as well as the nature of the mutuality existing between Islamic Banking and stakeholders in the industry, usually among Islam.

Sharia is a law aimed at establishing a world ruled entirely by Islam and the harsh Sharia laws. These laws govern every aspect of life and prohibit individual, political, and religious freedom. For instance, the Boko Haram insurgency in Nigeria is Islamist radicalism, originated from the belief that ‘Western education is forbidden.

For more than a decade today, Nigeria has experienced series of violence and wanton destruction of lives and properties by these Islamic extremists: Boko Haram, banditry, Islamic State West African Province (ISWAP), Sheit; which have claimed more than 30,000 lives of both the Jihadists and innocent people, displaced more than 4 million persons and thousands, kidnapped.

Furthermore, the same scenario applies to other African countries like Egypt, Tunisia, Chad, Benin, Niger, Cameroon, Ethiopia, Congo, Uganda, Morocco, Sudan, Somalia, Djibouti Liberia, Zimbabwe, Burkina Faso, etc, where scores have been gruesomely murdered and properties worth billions of dollars destroyed.

Islamist extremism (terrorism) is fueled by politicized ideology and money, and therefore, for it to thrive, it requires funding. That funding is what Islamic Banking is believed to be doing among African states, which are third world countries facing challenges of political instability, underdevelopment, unemployment, high poverty rate, and illiteracy.

According to the United Nations Office on Drugs and Crime, terrorist organizations fund their terrorism activities through funds generated from legal and illegal sources, which amounts to US$1.5 trillion per year.

In addition to the legal activities of the organization, so many Islamic charities are involved in illegal activities such as buying weapons and sponsoring terrorist attacks.

“No documentation is kept of these monetary exchanges; the code of practice of Islamic Banks requires the destruction of all the documents as soon as the zakat money transfer has taken place. Some charities channel funds via Islamic banks to Islamic groups and cells scattered around the world,” UN Office on Drugs and Crimes, stated.

Nigeria’s government is set as a secular society, although the majority of her population are Muslims, have done everything within their power to trace the sponsorship of Islamism in the country; but all efforts were in futility.

Alarms have been severally raised on different occasions about the sponsorship of Islamism in Africa and the sources of the sophisticated arms wield by these Jihadists, but no direct group or persons have been held culpable because of lack of records.

This boils down to the UN submission that the financial organization usually destroys every of her financial and product dealings once the transaction is completed. That is to say, it’s outrightly impossible for one to know the terms of the agreement they had with their clients.

A military authority who pleaded anonymity, when asked about the source of funds and weapons that the terrorist groups use, said, “the Jihadists carry armories and mines far much better than that of the government military troops. They use assorted vehicles and weapons of mass destruction that are quite incompatible with that which we use, and that’s why whenever they attack, they leave the place with casualties.”

He went ahead to state that Africans due to poor leadership have been plundered to the poverty level, and therefore, “It’s difficult to get any African who can sponsor religious extremism of such magnitude, either as a group or an individual; that considering their level of operation and allegiance to Islamism, the Islamic Banking and other charity organization under the aegis of Islamic states must be the sponsors.”

“These terrorists often hoist their flags in any of the African territories that they conquered, declaring the area Islamic state, which is in tandem with the Sharia law. Some of their kidnapped non-Islam victims that were miraculously freed either by ransom or otherwise, testified that those jihadists usually force them to denounce their beliefs and accept Islamic beliefs for them to live.”

“Our culture as Africans also forbids killing. But the fact remains that the ‘Almajiris’, who are illiterates due to the Islamic belief, ignorantly believe that killing for the sake of projecting Islamic belief is a direct ticket to heaven. So, no doubt, they receive funds and weapons from some Islamic countries and Islamic Banking,” he added.

The reason why Africa is finding it difficult to win the war against Islamism and terrorism is because of poverty in the land and the quest for materialism and wealth emancipation. Both poverty of the mind and poverty in the true sense of it,” said John Okenu, Lagos-based security expert.

“The gullible African leaders borrow funds from Islamic Banking in the name of using it to develop their places, reaching many agreements with the Islamic Banking (including to join Islamic states and fight Islamic Sharia course) just to have the fund. The pact which most of them considering the laws of their land does not keep, and by then, they have squandered the money.

“These lenders will now force the belief on these states and the innocent one will bear the brunt of the controversy that would emanate as a result of that,” he stated.

It is a general belief in the whole continent that Islamic Finance and other charity organizations under the same umbrella sponsor and fund Islamism in Africa, but it’s still not on record with evidence of when and how they do that.