The Potentials of Islamic Banking on Poverty Alleviation in Nigeria

It is a well-known fact that the global financial crisis prompted the establishment of Islamic finance to complement the traditional financial institutions, as a medium to lessen the endemic risk exposure inherent in the financial institutions. The principle goals and functions of the Islamic finance comprises the economic well-being of the populace, through full employment and maximum rate of economic growth, equal distributions of income and wealth and as a result socio-economic justice, and the generation of sufficient savings and their productive mobilization and stability in the value of money (Chapra, 2000). On the other hand, poverty, which is the absence of means to attain a “decent†standard of living, has been found to be very common in the Muslim world. It has been estimated that over 40 per cent of the Muslim population languishes in abject poverty, with nearly 350 million living on less than US$1.25 a day (C0MCEC, 2014). The objective of this study is therefore, to determine whether Islamic banking in Abuja, Nigeria has the potentials to alleviate poverty. The research is exploratory in nature, relying on secondary sources of data such as journals, periodicals, conference proceedings, textbooks, internet search and other source of published data. Findings from the analysis revealed that Islamic Banking is indeed a means of alleviating poverty. The conclusion drawn from the study indicates that the following are the poverty alleviation strategies, methods and instruments used by Islamic banks, these are; Murabaha, Mushraka, Mudaraba, Ijarah, Sukuk, Interest free service, good business ethics, Islamic microfinance and corporate social responsibility. The study further observed that Abuja, Nigeria’s Federal Capital, with its large Muslims population, shifting of attention and growing interest on Islamic banking products by its populace and the promotion of development of infrastructures in Malaysia and other countries presents a great potential for the practicability of Islamic banking products in alleviating poverty in Abuja, Nigeria. The study therefore, recommended that Islamic Banking should be highly encourage by the appropriate authorities in order to assist in the war against poverty in Abuja and Nigeria at large.