‘First step to building wealth is to be financially literate’
Ridwan Sanusi is a leading voice in Islamic Finance in Nigeria. He is a composite finance and investment professional with nine years of experience in banking, management consulting, financial training and coaching. A member of the Certified Financial Education Instructor, and the Certified Finance Islamic Executive, he started a personal finance training and coaching outfit, @muslimfinancecoach, targeted at helping Muslims attain financial freedom through smart money management and investment decisions.
In January 2021, he founded the Smart Halal Investors Club, a global community of like-minded individuals who are passionate about growing their wealth the halal way. His passion for Islamic Fintech led him to put together a team of brilliant minds to start the non-interest business-financing platform in Nigeria, WeFundMatch. In his role as the CEO/Co-founder of the firm, Sanusi leads a team of experts in technology, Islamic finance, credit analysis and Islamic jurisprudence to bridge the funding gaps of Small and Medium Enterprises (SMEs) in Nigeria. In this interview with IJEOMA THOMAS-ODIA, he addressed issues of Islamic financing in Nigeria.
Islamic Finance seems to be poorly adopted in Nigeria. Why has it been so?
I don’t think Islamic Finance has been poorly adopted in Nigeria. I think Nigerians are the ones who attach religious sentiments to Islamic Finance, some Muslims inclusive. There is a massive evolution happening within the global Islamic Finance market. As of 2019, the global Islamic Finance assets were estimated to be valued at $2.88 trillion and were projected to grow to $3.69 trillion by 2024. Nigeria has had its own fair share of this growth. In a space of four years, the Federal Government has raised three Sukuk products that were targeted at the rehabilitation of roads and provision of infrastructures to the common person. These products were oversubscribed. Just recently, the Pension Fund Administrators were allowed to offer non-interest products to their customers. In every corner of the Nigerian financial system, you will find a non-interest alternative. This was not the case some six years ago.
Can non-Muslims benefit from Islamic banking? If yes, in what ways?
Yes, I always say that Islamic banking/Islamic Finance isn’t only for Muslims. It’s for humanity. The principles of Islamic banking align with good virtues that everyone would like to see in others or in our financial institutions. Virtues like fairness, justice, equity, transparency, spirit of brotherhood, trust, partnership and risk sharing.
In Islamic banking, the customer and the bank are regarded as partners in the transaction and they both seek to ensure the successful execution of the transaction. In conventional banking, the bank is a lender who only cares about the interest it earns on the loan. When the customer finds it difficult to pay back, rather than share in the risk, the bank looks for ways to recover the facility with additional interest that would have accrued on the loan default thereby further increasing the burden on the customer. The customer, on the other hand, will inflate his price of goods/services in order to meet up with the interest payments. A non-interest bank will never say no to anyone who wants to transact with the bank because of his or her faith. Islamic banking is part of our day-to-day dealings with one another irrespective of our religious beliefs.
Do we currently have enough Islamic financial institutions in the country?
For now, we only have three non-interest banks with a banking licence compared to over 20 commercial banks. This should tell you that the activities of the commercial bank would overshadow the non-interest banks. In an economy like Malaysia where the number of non-interest banks is almost the same as their commercial counterparts, their people are reaping the benefits of the Islamic banks. So, we need more non-interest banks in Nigeria.
The non-interest banks can provide financial services and products that will help support small businesses, drive financial inclusion and reduce unscrupulous lending activities of some commercial and micro-finance banks. Non-interest finance products are designed to help preserve and elevate the wealth of individuals through effective collaborations between all stakeholders. What we see in our conventional financial system today is tantamount to a Ponzi scheme, a situation where people who are benefitting from the financial system are not the real owners of the money or wealth. Islamic finance helps to redistribute wealth across the system in an equitable way by ensuring that you can only benefit from what you own.
You set up a coaching outfit, the Muslim Finance Coach. What are some of your activities?
The Muslim Finance Coach is a personal finance and an investment coach. This is my personal brand. I started it because I saw the need for people, especially Muslims, to be financially educated so they can take control of their finances. I believe the first step to building wealth is to be financially literate. Just like the popular saying goes ‘making more money won’t make you rich, knowing how to manage it will’. You can’t manage money if you lack financial knowledge or financial skills.
Some of my activities include one-on-one coaching, group coaching, financial training and seminars, investment advisory, financial planning. I use digital tools to drive most of my training and coaching activities. I share valuable financial and investment tips regularly on social media where I get most of my clients. The COVID-19 pandemic and the lockdown gave me an opportunity to widen my online reach and to increase my engagement on social media platforms especially on Instagram where I am mostly active. As a finance and investment coach, I help many of my clients gain financial security, ditch their debts, earn extra income from halal investments and increase their net worth in keeping with their Islamic values.
What makes your Smart Halal Investors Club and WeFundMatch unique in the Islamic finance space?
Although they seem to be operating within the same space, they serve two different purposes. Smart Halal Investors Club (SHIC) is an investment community where members have exclusive access to credible halal investments that have been verified to be Shariah Compliant and that give a high return on investment. Our focus at SHIC is to create a guilt-free way for our members to build generational wealth by providing them with a diversified portfolio of investments in various asset classes including real estate, fixed income, agriculture, startup investing and stocks and different regions.
WeFundMatch is a peer-to-peer business financing that I co-founded with two of my friends. It is a Fintech solution to solving the twin problems of obtaining ethical funding faced by SMEs and earning good returns on halal investments. We use the latest technology to match these two drivers of the economy seamlessly.
What is the loan method in Islamic finance, since it does not attract interest?
First, in Islamic Finance, making money on money that is not backed by an asset is prohibited. Islamic finance encourages investment in the real sector/economy. This is because charging interest on loans can create artificial transactions without any benefit to the economy – ‘A’ gives money to ‘B’ with 10 per cent interest, ‘B’ can give the same money to ‘C’ with 15 per cent interest and then ‘C’ gives the money to ‘D’ with 20 per cent. Each party in this chain has benefitted without having real ownership of the money and without creating any tangible product or asset that will benefit the people.
Islamic banks on the other hand will enter into a partnership contract with a customer who runs a business and shares the profit made on the transaction according to a pre-agreed profit sharing ratio. Alternatively, the Islamic bank can buy an asset and resell to the customer at a fixed markup. When the customer is genuinely facing some business challenges, the non-interest bank along with the customer will find effective ways to turn things around without inflicting damage or pain on the customer.
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