According to Professor Abdulmajeed Alaro, an expert in Islamic Finance and Law, ethical financing models could serve as a viable remedy for Nigeria’s escalating unemployment rate.
He urged financial institutions to channel more funds into youth-led enterprises, agriculture and other productive sectors.
He said expanding access to Sharia-compliant financing could help young Nigerians turn business ideas into viable enterprises, create employment and stimulate economic activities.
He said this is particularly useful among people who struggle to obtain loans through conventional financial arrangements.
Alaro spoke while delivering the keynote address at the Islamic Finance Youth Summit organised by NEXTIF at the Ilorin Innovation Hub, Kwara State.
The summit, themed: “Ethical Innovation, Ethical Generation: Rethinking Finance and Innovation,” brought together industry experts and young people to explore opportunities in ethical finance and technology.
The professor said the country’s unemployment challenge was compounded by the inability of many young people to access the capital required to establish businesses, despite possessing relevant skills, ideas and entrepreneurial abilities.
He drew attention to the difficulties confronting graduates with digital skills, smallholder farmers, women entrepreneurs and young business owners who have viable ideas but lack collateral or affordable financing.
“Consider the young entrepreneur with a bright business idea but no collateral, the smallholder farmer who needs financing before the planting season, the woman who operates a growing enterprise but cannot access affordable capital, and the graduate who possesses digital skills and creative energy but lacks the resources to turn an idea into a viable business,” he said.
Alaro challenged young Nigerians to move beyond seeking employment and begin developing technology-driven solutions that could connect businesses with ethical sources of funding.
He identified financial technology companies, digital platforms for Sharia-compliant financing, agricultural funding solutions, blockchain applications and crowdfunding systems as areas where young innovators could make significant contributions.
However, he warned that the success of Islamic finance should not be measured merely by its compliance with Islamic legal principles, but by its ability to address real economic problems.
He said financial institutions must demonstrate their social impact through job creation, equitable distribution of wealth and support for communities and individuals underserved by existing financial arrangements.
Alaro particularly urged Islamic financial institutions to direct more resources towards agriculture, education, healthcare, affordable housing and infrastructure instead of concentrating disproportionately on transactions that offer convenient commercial returns.
The co-founder of NEXTIF and summit convener, Yusuf Abdulwasiu, said the employment potential of Islamic finance lay in its emphasis on connecting capital with actual economic activities.
He explained that partnership-based arrangements, particularly profit-and-loss sharing, could provide businesses with funding while allowing investors to participate in the outcomes of productive ventures.
Abdulwasiu also called on the Federal Government to intensify public education on Islamic finance, proposing its introduction into relevant school curricula to expose young Nigerians to ethical financing alternatives early in their education.
Similarly, NEXTIF co-founder and summit co-convener, Safiyyah Isyaku Umar, said the initiative was established to address the knowledge gap among young people and introduce them to opportunities in the expanding Islamic finance industry.
She said the sector offered career prospects beyond banking, identifying Sharia advisory services, investment management, consultancy and other specialised professional services as areas young Nigerians could explore.
Umar called for more internships and practical industry exposure to prepare students for employment and entrepreneurship in the sector.
She also urged the government to create a more supportive regulatory environment for Islamic financial institutions, particularly by addressing approval processes involving the Central Bank of Nigeria and the Securities and Exchange Commission.
Providing an industry assessment, the Managing Director and Chief Executive Officer of the International Ethical Finance Academy, Dr Muhammad Mustapha Ishaq, said Nigeria had made encouraging progress in Islamic finance but had yet to fully exploit its potential.
He identified limited geographical coverage and inadequate product development as major constraints.
He noted that the concentration of Islamic financial institutions in major cities had left many rural communities without sufficient access to their services.
Ishaq called for policy adjustments and improved financial infrastructure to address operational challenges, particularly liquidity management, while ensuring that Islamic and conventional financial institutions operated on a level playing field.
He urged young Nigerians to position themselves for opportunities in the sector.
He highlighted Sukuk as an important financing instrument for infrastructure development, encouraging young innovators to explore ways of addressing existing gaps in the country’s financial ecosystem.
A participant, Abdulbasit Umar Balogun, said public misconceptions about Islamic finance had continued to limit its acceptance, particularly the belief that it was exclusively meant for Muslims.
He argued that its principles of fairness, ethical conduct and financial inclusion made it relevant to Nigerians across religious backgrounds.
What You Should Know
An Islamic finance expert is calling on financial institutions and the government to expand access to ethical, Sharia-compliant loans to help young Nigerian entrepreneurs start and grow businesses without needing traditional collateral.
- Positive Impact: Provides alternative funding for smallholder farmers, digital innovators, and women entrepreneurs who struggle to secure conventional loans, ultimately driving job creation and economic growth.
- Potential Concerns: Public misconceptions about the inclusivity of Islamic finance and operational barriers like limited rural reach and complex regulatory approvals could hinder its widespread adoption.
