OPINION/VIEWPOINT

Usurping legislative powers

By kingsley Omose

The outcry that would greet efforts by a serving Minister of Petroleum to issue guidelines that contain radical changes to the laws in the Upstream sector as contemplated in Petroleum Industry Bill, is difficult to imagine, but that is exactly what is happening with the introduction of full-fledged Islamic banking by Mallam Sanusi Lamido Sanusi.

Although this article is not about the radical changes contemplated to the Upstream sector by the Petroleum Industry Bill, the parallel with full-fledged Islamic banking is apt because changes contained in the Guidelines on Non-Interest (Islamic) Banking are just as radical to the Nigerian Banking sector.

Without having to beat around the bush, the intention of Mallam Sanusi Lamido Sanusi, the Central Bank of Nigeria Governor is to launch an alternative to the existing banking system in Nigeria through the use of guidelines, without the need for enabling legislation.

Mallam Sanusi believe that the existing laws in the banking sector empower him to establish an alternative banking system through issuing guidelines, and is relying on provisions that allow for non-interest banking in our banking laws as a basis for his unilateral actions.

The issue here is not on the merits or demerits of Islamic banking, or whether interest free banking is better than the interest based system that is at the core of our banking system and the basis on which theCBN has been established and licenses issued to deposit money banks.

The issue is, what was the existing state of affairs regarding Islamic banking prior to the January and June 2011 guidelines issued by the CBN, and what changes have been made by these guidelines and whether these are changes that can properly be addressed through guidelines.

I am not miffed that Mallam Sanusi in his zeal to establish an alternative banking system through guidelines initially equated non-interest banking as being synonymous with Islamic banking, what is troubling is whether an individual can arrogate to himself such awesome powers without the legislative backing of the National Assembly.

Prior to December 31, 2010 when the CBN issued the Guidelines on Sharia Governance for Non Interest Financial Institutions in Nigeria that called for the establishment of Sharia Advisory Committee for each of these institutions conventional banks could deal in Sharia Compliant Financial products.

In order words, licensed deposit money banks were allowed by the CBN to offer or sell financial products or services that were Sharia compliant, and banks like Bank PHB took advantage of this window to offer such services side by side with it's normal banking services.

Having acknowledged that non-interest banking was not the exclusive preserve of Islamic banking; the CBN withdrew the December 2010 guidelines and in June 21, 2011 issued the Framework for the Regulation and Supervision of Institutions Offering Non-Interest Financial Services in Nigeria.

The June 2011 guidelines now categorized non-interest banking into two, Non-Interest Financial Products and Services based on Principles of Islamic Commercial Jurisprudence and Non-Interest Financial Products and Services based on Any Other Established Rules and Principles.

The most significant of the changes introduced by the June 2011 guidelines is the elevation of non-interest banking using principles and rules of Islamic commercial jurisprudence to an alternative banking system at par with the financial products and services offered by conventional financial institutions.

To enable this alternative system, the June 2011 guidelines now give the CBN the power to license full-fledged Islamic banks, full-fledged Islamic merchant banks, full-fledged Islamic Microfinance banks, Islamic development banks, Islamic primary mortgage banks and Islamic finance corporations.

The guidelines also replaced the Sharia Advisory Councils with Advisory Council of Experts to work with the Institutions OfferingIslamic Financial Services while the CBN will have it's own Advisory Council of Experts but is however silent on the roles and modes of appointment of members.

Although Mallam Sanusi claims to derive the powers to issue these guidelines from enabling laws applicable to the banking system, it is wrong for an alternative banking system to be foisted on Nigeria through guidelines and not by enabling law promulgated by the National Assembly and assented to by the President.

Aside from that, the proposed full-fledged Islamic banking as put forward by the CBN has serious implications for our Company Law, Legal and Judicial systems, Audit and Tax systems, and the secular nature of the Nigerian constitution, that can only be properly addressed in the National Assembly.

Mallam Sanusi is being clever by half when he calls on those opposed to his actions to seek redress in civil courts, seeing that he had earlier declared in a write up that he believes the Sharia system as imposed by some states in Nigeria is legal because they were never declared null and void by a court of law.

This is the time for well meaning Nigerians not to play the Ostrich and pretend that this issue will blow away, but to call on Mallam Sanusi to suspend his guidelines and for a comprehensive Bill on Islamic Banking to be forwarded to the National Assembly for consideration and promulgation.