Poverty is one of the biggest threats to Nigeria’s social stability, but it can be reduced through the activities of Islamic Finance cooperatives, Islamic microfinance, and Islamic social finance platforms. Dr. Abideen Adewale, Head, Research and Publications, Islamic Financial Services Board (IFSB) made the point while discussing “Poverty and Inequality in Nigeria’s Economy: The Role of Islamic Finance”.
Speaking on the concept of poverty, Adewale said it has led to hopelessness and provoked desperate acts. According to him poverty and inequality are responsible for apathy, economic exclusion, and the spate of violence in the country.
The IFSB official said inequality is about denial of fair and equivalent enjoyment of rights, and the persistence of arbitrary discrepancies in the worth, status, dignity, and freedoms of different people.
He listed other dimensions to inequality to include: political inequality, social inequality, gender Inequality and educational inequality.
According to him, poverty can be viewed from the Islamic context of “fuqaraa” (the poor) and “masakeen” (the needy).
He noted that poverty was a static phenomenon that moves from one generation to another. He said when designing Islamic finance to play a role in addressing poverty, the conceptualization should be in the light of “masakeen”.
Giving a presentation on poverty and inequality indices in Nigeria, the expert cited the National Bureau of Statistics (NBS) 2019 index which showed that over 40.1% of Nigerians are poor.
Reviewing the role of Islamic finance, he explained that the Islamic development bank has come up with an economic empowerment paradigm, that views poverty in member countries from six obstacles:
- Lack of access to well designed & profitable project opportunities
- Low social capital for the poor to build intelligent partnerships that support his/her economic activities
- Lack of sufficient affordable infrastructure that supports economic activities
- Lack of access to Finance
- Lack of capacity and weak belief in self-potential and
- Lack of access to relevant markets
According to him, the areas that Islamic finance can support socio-economic activities are the following:
- The linkage to real economic activities promotes shared prosperity via the acquisition of sustainable livelihood assets. (human capital, social capital, physical capital, natural capital, psychological capital)
- General low level of financial citizenship, especially among the youths and women (family empowerment).
- Huge potentials in the Islamic Fintech space
- Untapped Islamic social finance platform and potentials
- Huge infrastructure deficit ( potential for the use of Sukuk)
- Extant regulatory support and guidelines
- Opportunities for requisite human capital development (IIUM, INCEIF, IIIBF, BUK).
On the side of the IsDB Economic Empowerment Approach, according to him, there are 7 fundamentals to enable the disadvantaged population, play an active role in the economic cycles in their countries.
- Considering the poor as an Economic Actor
- Access to Relevant Market within Nigeria and abroad
- Investment opportunities
- Supporting Infrastructure
- Appropriate Funding
- Smart Partnerships
- Building Capacity
Dr. Adewale gave insight into the proposed Islamic finance-based poverty alleviation model. He explained that the government and private sector would need to deepen collaboration to move the economy forward.