Jaiz Bank, Wema Bank and SunTrust Bank yesterday signed a Memorandum of Understanding (MoU) and secured a $50 million from Islamic Corporation for the Development of the Private Sector (ICD) for lending to small and medium scale business on profit sharing basis instead of the normal banking interest based system.
The signing ceremony was held in Lagos on the occasion of the third Africa Islamic Finance forum.
Under the terms of the MOU, SunTrust bank will get a financing of $10 million for lending purposes, Jaiz bank $20 million and Wema bank $20 million.
ICD is a multilateral organization and a member of the Islamic Development Bank (IsDB) Group. Its authorized capital stands at $2.0 billion, of which $1.0 billion is available for subscription with its shareholders consist of the IDB, 52 member countries, and five public financial institutions. The mandate of ICD is to support the economic development of its member countries through provision of finance and equity investments to private sector projects in accordance with the principles of Islamic finance.
The signing agreement was witnessed by Aliyu Ahmed who represented the Minister of Finance, Mrs. Kemi Adeosun. Speaking at the forum Adeosun called on Islamic Corporation for the Development of the Private Sector (ICD) to establish a long-term commitment towards the economic development of member countries.
Jaiz bank Managing Director, Hassan Usman while expressing optimism about disbursement of the fund, said the bank has been supporting SMEs since it was created five years ago adding that the bank together with other banks have grown Islamic banking by over 25 per cent in the last years.
Also, the SunTrust Chief Executive Officer, Muhammad Jibrin said that the deal has provided for the bank another line of funds to support the growth of small and medium size enterprises. He explained that non-interest loans are more supportive to businesses as there are no pressures of accumulated interests. According to Segun Oloketuyi, the Managing Director of Wema Bank Plc., the funds will help bolster the Bank’s vision of building a sustainable retail sector by supporting micro, small and medium scale enterprises.
SMEs are one of the greatest contributors to Nigeria’s economic growth. Research has shown that the sector has a similar effect worldwide, contributing to over 55% of GDP and over 65% of total employment in high-income countries.
Mohammed Al Ammari, the acting CEO and General Manager of ICD, confirmed his excitement about the partnership, adding that it will further deepen its footprint in Africa, where a significant portion of its investment portfolio is domiciled. “ICD’s line of investment portfolio has been heavily concentrated in Africa over the years, seeking opportunities to grow funding for SMEs and provide economic-stimulating investments within the region.”