Implementing Islamic Microfinance In Nigeria: A Matter Of Equity And Social Justice

Abstract

Many hardworking people from unprivileged backgrounds are automatically
disadvantaged simply because they lack access to financial capital. Observably,
microfinance provides a way out of the poverty trap if it is deployed
appropriately. Nigeria, like many other developing countries, has thus taken
up the challenge of developing inclusive microfinancing initiatives. In the
country, funding for small-scale businesses is available from both the
government and the private sector. Unfortunately, the nature and conditions
of the schemes fail to meet the sensitivities of a substantial group who would
otherwise have been eligible for the grants and loans. The practical implication
is that such group would be twice excluded from the financial system. These
potentially excluded groups are those poor Muslims who might desire funding
but are unable to benefit from the government schemes because the loan
conditions contradict their faith. It is argued that the effect of the status quo
is that it breeds further inequality and inequity and could even amount to
outright (or indirect) discrimination. This contention is substantiated through
constitutional analysis and also in light of a contemporary economic welfare
theory – the Capability Approach. The article argues that this marginalized
group has a right to Islamic microfinance. This right, it is further contended,
places justiciable (positive and negative) duty on the government. It, therefore,
calls that Islamic microfinance should forthwith be embedded into the fabric
of public governance in the country. The article demonstrates the exclusionary
problem by analysing some of the existing schemes, and it proffers alternative
sharia-compliant conditions for existing schemes.