An Exploratory Study of Perceived Economic Viability of ... · An Exploratory Study of Perceived...

Australian Journal of Business and Management Research Vol.2 No.08 [41-55] | November-2012

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An Exploratory Study of Perceived Economic Viability of Islamic Banking in Gombe Local Government

Area, Gombe State, Nigeria

Fada, Kodun Abiah

Master of Finance& Banking in Emerging Economies (University of Reading, UK)

Lecturer, Department of Business Administration,

Gombe State University

P.M.B.127, Gombe State

[email protected]

ABSTRACT

The paper set out to ascertain the viewpoints of the people of Gombe L.G.A. to review their perceptions of the

economic viability of Islamic banking. The paper presents primary data collected through the use of

questionnaire involving a sample of 134 respondents. The survey employs an exploratory factor analysis to

examine what the respondents perceive to be the economic viability of Islamic banking in the local government

area. The survey confirms that the advent of Islamic banking in the area will bring about economic benefits as it

will serve as a means for financial inclusion for the financially excluded and will also serve as a potential

vehicle for fund mobilization, create more employment opportunities and encourage foreign investment

especially from the Middle East amongst others. However, the paper suggests that in order to actualize these

economic benefits, the central bank and other relevant stakeholders including licensed Islamic banks must do

enough in the area of creating awareness of Islamic banking and its relevance to the people.

Keywords: Perception, Islamic Banking, Economic Viability

INTRODUCTION Strengthening financial systems had been one central issue both developed and developing nations have been

faced with. This is mainly because a sound financial system serves as an indispensible tool for channeling

financial resources vital for economic growth through the mobilization savings and putting them to productive

uses and transforming various risks.

Still at its infancy, Islamic banking today is playing important role in complementing its conventional peer in

the area of financial intermediation and serving both as trustee and custodian of people’s money or financial

assets. It has become strategically well positioned since its inception in Egypt in 1963 and sporadic progress in

1970s. Islamic banking today has grown quite remarkably both in number and size and enjoying unmatched

support from the likes of world bank and the international monetary fund that the hitherto infant industry has

now become a serious player in the global financial system catering for muslim and non muslim faithful who apt

to pursue ventures that are devoid of interest (Dogarawa, 2011; Joseph, 2011).

While just like their conventional counterparts, Islamic banks are motivated by profits, they are but market

driven on ethical and moral dimensions that are based on Islamic sharia dictates which prohibits receipt and or

payment of interest whileadvocating participatory banking on profit and loss sharing.

Also known as interest-free banking, Islamic Banking is not the only type of banking that is based on profit and

loss sharing or one that operates on interest free basis but it is the only one that is most developed and has

international acceptance (Sanusi, 2011).

This industry today is represented by over 250 financial institutions operating in over 75 countries including

Kenya, Guinea, UAE, S/Africa, Sudan, India and those of Germany, France, United Kingdom and the United

States. Today, a host of conventional Banks including HSBC, Barclays and Citibank are taking the lead for the

provision of a wide range of interest free financial support (Visser, 2009).The total assets of the Islamic banks

are estimated to be USD 3-4 trillion as at 2010 (Pena, 2011), which equals 3% of the total assets of conventional

banks.

Being a relatively new sector in local and international finance, Islamic banking is enjoying stable growth even

in the world of financial crisis at an average rate of 15% (Visser, 2009). Islamic Banking today has become

systematically important in many countries and too big to be ignored in others.

mailto:[email protected]


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It was in view of the potential benefits of Islamic banking, the central bank of Nigeria, precisely in June 2011

released a revised framework which provided a blue-print for supervising and regulating Non interest Financial

Institutions after several decades of unsuccessful attempts for the establishment of Islamic banking in the

country. One of the big questions being asked is whether Islamic banking has any relevance to the economy

which may justify the need for its introduction. In other words, the proposal for the advent of this system of

banking to function alongside the western oriented ones sound rather very controversial in religiously divided

Nigeria. It is in view of this that this study is conducted to ascertain what the people of gombe local government

area perceive to be the economic benefits of Islamic banking.

Analysis of data for this research was purely based on responses gotten from survey participants through the use

of structured questionnaire. One justifying reason for this paper is in view of the fact that it will place relevant

stakeholders including the cbn in ensuring Islamic banking gains acceptance which may lead subsequently to its

smooth take-off in the area. The paper will equally and undoubtedly add to a pool of existing literature on the

subject.

Following this introduction, the paper is structured as follows:

Section II provides a review of existing and related literature. Section III presents, analyzed and interpreted data

received from survey participants. Section IV provides a conclusion on the paper.

Conceptualization of Islamic Banking

Fada and Wabekwa (2012) observed that the concept of Islamic banking has been described quite distinctly by

many scholars. However, there seem to be no difference in over all meaning of the concept as portrayed by

them.

Rammal and Zurbruegg, (2007) see Islamic Banking as a baking that is based on Islamic shariah law, which

follows fighmuamalat, a term used to describe Islamic rules of transaction. This explanation did not vary

differently from that of Bello, (2007) who convened that Islamic banking is a system of banking activity which

is consistent with the practices and principles of Islamic shariah law and its application to the development of

Islamic economics. Ahmed, (2008) posited that Islamic banks are financial institutions whose rules and

procedures clearly state commitment to principles governing Islamic shariah law which bans payment or receipt

of on its operations. An Islamic bank, just like any conventional bank is a financial intermediary and at the same

time a trustee and custodian of people’s money or financial assets with main dissimilarities being the payoff of

its clients is a share in profits and or loss while the principles of shariah govern its operations (Dar and Presley,

2000).

While ban or prohibition of Interest (riba) seem to be more stressed by most scholars, it is important to note that

prohibition of interest is just one of the defining features of Islamic banking. Honohan, (2001) convenes that

Islamic banking generally precludes in strict sense recklessness or risks that are unnecessary (gharar),

exploitation of ignorance (jahl) and even gambling (maysir). Honohan, (2001) further noted that Islamic banks

are financial institutions that are there to provide support for economic activities that are ethically, morally and

lawfully right.

To sum the assertions of these scholars, Fada and Wabekwa (2012) posited that it is glaring Islamic banking is

one that is based on certain unique principles that vary from those of conventional banking. These unique

principles are ones derived from axiom of justice and fairness and ones that are in harmony with the nature and

reality of human beings. This unique system of banking is strictly founded and based on principles of sharia law

which prohibits absolutely in any form, the receipt and or payment of any predetermined or guaranteed rate of

returns, thereby shutting gates for the concept of usury or interest in financial dealings. My summary here is

consistent with Iqbal, (1997) assertions who noted that this system of banking rules out in complete sense the

use of debt based instruments while reprehending all sorts of speculative behavior in business dealings.

2.2 Evolution of modern Islamic Banking

Islamic banking has a recent origin as compared to its conventional counterparts. Although scholars have

discussed and analyzed issues with regards to a system of banking that is interest free based much earlier, much

exclusive attention to the subject matter is a twentieth century phenomenon (Fada and Wabekwa, 2012; Bala,

2004).

The first experiment of modern Islamic banking got on the way precisely on 25th

july, 1963 in Egypt. This

experiment was undertaken under cover for the fear of being labeled as a manifestation of Islamic

fundamentalism which was anthema to the government in power (Zaman and Movassaghi, 2001).


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First established in the town of Mit-Ghamr, the experiment took the form of a bank strictly meant for savings on

which any realized profits during the course of operation was shared in proportion initially agreed upon between

the bank and savers. Bala, (2004) noted that, this was aimed at changing the fundamental attitude of the people

living in the area towards savings and investment. The bank neither paid nor charged interest in all its dealings

with its clients. Funds were invested often in trade and industry in partnership with others or directly by the

bank and whatever profits made or returns on any ventures were shared with depositors (Ariff, 1988).

Ariff, (1988) noted that prior to Mit-Ghamr’s experiment of 1963, a small scale or limited scope interest free

banks had been tried before, one in Malaysia in mid 40s and the other in Pakistan in the late 1950s, neither of

these two survived.

The main starting break of Islamic banking as we know it today occurred in December 1970 at the 2nd

conference of foreign ministers of Muslim countries held in Karachi, Pakistan. It was at that conference that the

idea of a full-fledged Islamic banking was first mooted.

It was the work of this conference that triggered the establishment of Nasr social Bank in Egypt in 1971. In

1973 and 1975, The Philippine Amanah Bank and The Dubai Islamic Bank were established. Several others like

the Faisal Islamic of Sudan and Faisal Islamic bank of Egypt were established in 1977 (Bala, 2004). As at 1996,

Zaman and Movassaghi, (2001) documented that there were a total of 166 islamic banks with assets worth over

$137 billion.

In 2010, the total assets of the Islamic banks were estimated to be $3-4 trillion, equaling 3% of the total assets of

conventional banks (Pena, 2011).

From this, we can deduce quite easily that from its humble beginning in 1963, less than five decades now,

Islamic banking is sporadically progressing from being a relatively new sector in local and international finance

to one viable economies can hardly do without. Islamic banking is enjoying stable growth even in the world of

financial crisis at an average rate of 15% (Visser, 2009).

Financing Modes and Instruments of Islamic Banking

Except in terminology usage, concepts used in islamic banking are similar to those used in conventional banks.

These terminologies includeinclude:

2.8.1 Murabaha

This is similar to cost-plus sale contract in conventional banks. A murabaha operation refers to the sale of an

asset at a stated profit. In this type of contract, the bank makes purchase of asset(s) from a third party and then

the same product is sold to a client either on the basis of deferred payment or on the spot at a stated profit. This

allows a client to buy any asset without necessarily taking loan that is interest based.

2.8.2 Ijarah

Ijarah in Islamic finance refers to lease. The bank purchases an item and then leases the item to a client for

which fixed monthly payment is made. Usually, an ijarah often include the option of buying the asset by the

lease when the lease ends. This is one way Islamic banks provide finance for ownership of services or goods.

Normally, Ijarah is used to finance consumer goods such as motor vehicles.

2.8.3 Mudarabah

Also known as silient partnership in Islamic banking. It refers to partnership investment where an agreement or

contract between an investor and an entrepreneur is reached and where rewards and risks are shared between the

parties involved in the contract. In the event of profits, both parties to the contract receive the share which they

had initially agreed to share. On the other hand, where losses are made in the course of any business venture, the

cost is born by the investor or financier (the bank) while the entrepreneur losses his effort and time invested in

the business.

2.8.4 Salam

A term used for forward trade contract. Salam is a contract whereby a seller receives full payment of goods or

services at spot (in advance) but which supply of such goods or services to the buyer is undertaken to be made at

a specified date in the future.

Salam is a mode of financing that is widely used in financing the agricultural sector, where an investor pays for

a given quantity of agricultural output before the output is ready and then the seller supplies the buyer products

which had earlier been paid for.

2.8.5 Istisna

Istisna refers to partnership in manufacturing. It is a financing mode in Islamic banking where the product

involved is manufactured to meet the exact specifications of the buyer.


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Istisna is broadly in financing the housing sector, where a client seeks out finance for house construction. The

financier, usually the bank signs to construct a house either on a land purchased by the financier or on a piece of

land belonging to the client based on the specification of the client on the basis of istisna, which means payment

is fixed in such a manner the parties involved may wish. This mode of finance is also commonly used in

infrastructure finance.

2.8.6 Musharakah

This is also known as equity partnership. It involves profit sharing by partners in certain agreed ratio. Loses

made by partners while financing certain business venture(s) are born by the parties involved in the contract, in

accordance to the capital contributions of partners

Islamic Banking in Nigeria

Over the years, several efforts have been initiated by several institutions to provide Islamic financial products

and services in Nigeria (Dogarawa, 2011).

The governor of the central bank of Nigeria (CBN), Sanusi, (2011) pointed out that Islamic banking, a sector in

Islamic finance had been receiving serious attention by many promoters in Nigeria. He noted that the central

bank regards Islamic banking in the country as a form of banking that is based on profit and loss sharing which

is already contained in the constitution of Nigeria. He added that profit and loss sharing banks are ones that

transact business while maintain profit and loss accounts.

The evolution of Islamic banking in Nigeria dates as far back as 1991 when Banks and Other Financial

Institutions Decree (BOFIA) was enacted. Sections 23 and 61 of the decree recognizes banks that are based on

profit or loss sharing (BOFIA, 1991).

Between 1993 and 1995, several investor investors began applying to the CBN for licenses to operate Islamic

banks. The initiative as at then could not materialize because many investors could not comply with the

requirements of the country’s apex bank.

In 1996, Habib Bank, now Cornerstone bank opened an interest free banking window and began offering

shariah compliant products and services. However, the attempt did not register any significant success simply

because there wasn’t any regulatory framework for interest free banking in the country.

In 2004, investors continued to demand for full-fledged Islamic banks in the country. A piecemeal approval was

then granted to Ja’iz international to establish Ja’iz bank subject to meeting mandatory capital requirement

(Sanusi, (2011).

In 2005, FSS, known as Financial Systems Strategy was launched. The FSS provided a blue print which aimed

to revolutionize Nigeria into Africa’s International Financial centre (IFC) and power Nigeria in its quest to

become one of top 20 world economies by the year 2020.

In 2008, an Islamic Finance Working Group (IFWG) was formed. This group was supported by Enhancing

Financial Innovation and Access (EFI&A) which together brought all the major stakeholder in the country’s

financial industry which include PENCOM, NAICOM, NDIC and market operators that were interested in

offering Islamic products and services. CBN representatives merely acted as observers.

Enhancing Financial Innovation and Access (EFI&A) was then conceived and offered funding by the Ford

Foundation, DFID and Bill $ Melinda Gates foundation to help promote the development of the financial

industry in Nigeria.

In 2009, the CBN joined and became a full council member of the Islamic Financial Services Board. In the same

year, the country’s apex bank issued a draft framework which had with it blue prints of regulating and

supervising non-interest banks in the country.

In August 2010, The Central Bank of Nigeria a new model of banking which placed non-interest banks in the

category of specialized banks. Non-interest banks were then classified into two different categories which

include:

National non-interest bank

Regional non-interest banks


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While the former was mandated by this classification to have a capital base of N10b and operate in all the 36

states of Nigeria including the capital city (FCT), the former was required to have a capital base of N5 billion

and will have its presence in at least, six states and at most, twelve states of the Federation, and within one but

not more than two political zones of the Federation.

In January, 2011, Nigeria’s apex bank released the framework for supervising and regulating interest free

banking in Nigeria.

Description of the Study Area

This research was conducted in Gombe Local Government Area of Gombe State in Nigeria. Gombe is the

capital city of Gombe state and is found at the North Eastern part of Nigeria. It is also the headquarter of the

Gombe Emirate council which covers most of the state and has the following GPS: 10°15′N 11°10′E / 10.25°N

11.167°E .

A map of Nigeria showing Gombe State, within which is Gombe Local Government Area

Source: Global Administrative Area Map, (2012)

The Local Government area has a population of 266,844 (National Population Census, 2006). It covers an area

of land up to with a density of 5,131.6inh/ (GADM, 2012). Communities found within the local

government area include Shamaki, Dawaki, Bolari, Fantami, Jekadafari, London Maidoruwa, Kumbiya-

Kumbiya, Federal Lowcost and Tumfure. Major tribes within these communities are Fulani and Hausa.The

Local Government area is for agricultural activities with major crop produce comprising of groundnut, cowpea,

pepper and millet while major livestock produce include cattle, sheep, goat and poultry.

Gombe Local Government Area has a comparative advantage in products including coal, diatomite, limestone,

gypsum coal and calcite.

Residents of the local government area are amicable, accommodative and peace loving

Analysis of Questionnaire

The study is rather exploratory in nature and it employed a convenience sample survey. A total of 150 structured

questionnaires were administered by the researcher of which 141 were completed and returned by the people

who took part in the survey, 7 of the questionnaires were considered incomplete and non-useable. As such, a

total of 134 questionnaires were accurately analyzed for this work. The questionnaire was structured into two

sections. Section one sought to ascertain the features of respondents while section two sought to ascertain the

people’s perceived economic viability of the subject matter.

Age Distribution of Respondents

The purpose of this question is to check out the age distribution of all the respondents that took part in the

research process.

Source: Field Survey, 2012

Age (years) Frequency Percentage (%)

19 and Under 13 9.70

20-29 45 33.58

30-39 39 29.10

40-49 21 15.67

50-59 11 8.21

60+ 5 3.73

Total 134 100


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Thus, the researcher concludes that, age group of 20-29, an age group with the highest participation rate of

33.58% was the age group of respondents who actually took part in this

research, followed by people within the age group of 30-39, representing 29.10% of the total rate.

Gender of Respondents

Gender Frequency Percentage (%)

Male 83 61.94

Female 51 38.06

Total 134 100

The purpose of this question was simply to determine the sex or gender of respondents that participated in the

research process. The table above shows that 61.94% of the survey participants are males while 38.06% are

females.

Religion of Respondents

Religion of Respondents Frequency Percentage (%)

Buddhist - -

Christian 85 63.43

Jew 1 0.75

Muslim 48 35.82

Total 134 100


The result of this survey shows that majority of respondents who actually took part in the research are Christians

(85), with a 63.43% of the total participation rate. 48 people representing 35.82% are Muslims while 1 person

representing 0.75% opined to be Jew.

Marital Status of Respondents

Status Frequency Percentage (%)

Married 53 39.55

Separated 5 3.73

Widowed 6 4.48

Divorced 2 1.49

Single 68 50.75

Total 134 100


The survey as shown in the table above involved 39.55% married people. 3.73%, 4.48% and 1.49% of the

people who took part in the survey are separated, widowed, and divorced respectively while 50.75% opined to

be single at the time of research.

Educational Level of Respondents The purpose of this question was to determine the level of education of respondents that actually took part in the

survey.

Education Frequency Percentage (%)

High School 16 11.94

Diploma/Certificate 29 21.64

Bachelors Degree 57 42.54

Postgraduate 20 14.93

Professional 12 8.96

Other (s) - -

Total 134 100


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Findings revealed that all the people who did take part in the survey were educated people. 42.54% were

thought to have attained or are in the process of attaining a bachelor’s degree. 11.94% and 21.64% respectively

have high school qualification and diploma certificates while 14.93% and 8.96% of the participants have

postgraduate qualifications and professionals respectively.

Reason(s) for Associating with a Bank

Respondents were asked their reasons for associating with banks. Findings as revealed on the table below shows

that all the respondents do have at least one form of association with banks, reasons ranging from investment to

use of phone or internet banking which enables them access account status, make transfer payments as well as

settle bill with relative ease. This is a proof of how important banks or financial intermediaries are in our world

today (Fakhrul-Ahsan, 1998).

Reason Frequency Percentage (%)

Investment 30 22.39

Salaries/Saving Account 98 73.13

Borrowing 1 0.75

Phone/Internet Banking 1 0.75

Others (Security) 4 2.99

Total 134 100


Particularly, the research shows that 73.13% of people associate with banks for saving purposes while 22.39%

for investment purposes. 0.75% for borrowing reasons and the convenience that comes with internet banking.

2.99% opted for others specifying reasons such as security for their money and other valuables.

I have heard about Islamic Banking Before now

That Islamic banking is a recent phenomenon and quite controversial in religious divided Nigeria, respondents

were asked if they had heard of Islamic banking before the time of research. The following responses were

recorded

Responses Frequency Percentage (%)

Yes 104 77.61

No 26 19.40

Don’t Know 4 2.99

Total 134 100


19.40% of the participants have never heard about Islamic Banking before the time of this survey. 2.99% circled

“I don’t know”, meaning they can’t exactly say or remember if they have heard about Islamic Banking before

the time this survey was conducted. However, 77.61%, opined to have heard about Islamic Banking before the

time of this research. Going by the majority, the researcher hereby concludes that Islamic-banking as a term is

not entirely new to the people of the area.

The idea for the introduction of Islamic Banking is

Participants were asked to provide their judgments on the government’s idea to introduce Islamic banking into

the country’s financial system which is predominantly western oriented or conventional in nature.


An Excellent Idea 36 26.87

A Very Good Idea 13 9.70

A Good Idea 28 20.89

A Fair Idea 23 17.16

A Poor/Bad Idea 34 25.37

Total 134 100



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26.87%, 9.7%, 20.89% and 17.16% thought the idea for the introduction of Islamic banking to be Excellent,

Very good, Good and fair respectively while 25.37% thought the idea was a bad idea. That a total of 74.63%

think the idea is either Fair, Good, very good or excellent, the researcher concludes that the idea to introduce

Islamic banking is a welcome idea by the people of the local government area.

Do you think Gombe L.G.A. is a suitable place to implement Islamic Banking?

Although at the time of this research there are no functional Islamic banks in the area being studied, the question

was posed in order to determine people’s thought about the suitability for the implementation of Islamic banking

in Gombe Local Government Area.


Yes 60 44.78

No 42 31.34

Don’t Know 32 23.88

Total 134 100


Responses of survey participants reveal that 44.78% think Gombe L.G.A. is a suitable place for the

implementation of Islamic Banking. 31.34% think otherwise, that Gombe LGA is not a suitable place to

implement Islamic banks while 23.88% of the respondents do not know whether or not Gombe LGA is a

suitable place to implement Islamic Banks.

Islamic Banking can be seen as an alternative means of Financial Intermediation


Yes 65 48.51

No 37 27.61


Total 134 100



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Respondents were asked on whether the think the advent of Islamic banking should be seen as an alternative

means for financial intermediation. Responses recorded revealed that 48.55% of the participants believe that

Islamic banking can be seen as an alternative system of banking or financial intermediation. 27.61% of them had

a contrary opinion that Islamic Banking in the Local Government Area should not be seen as an alternative

means of financial intermediation while 23.88% don’t know whether or not the advent of Islamic banking in the

area would serve as an alternative means for financial intermediation. On that premises, the researcher

concludes that the advent of Islamic banking in the area should be seen as an alternative means of financial

intermediation to the dominant interest based conventional one.

I will use Islamic Banking if introduced in Gombe Local Government Area

The main idea behind this question was to ascertain the level of support Islamic banking will receive in the local

government area being studied.


Yes 60 44.78

No 61 45.52


Total 134 100


Results shows that 44.78% of people who took part in the survey will make use of Islamic banking if introduced

in the local government area. On the contrary, 45.52% said they will not use Islamic banking if introduced in

gombe local government area while 9.70% of the participants do not know if they will make use of Islamic

banking, its products and/or services if introduced in the local government area.The researcher therefore

concludes that there is no significant difference in responses received to say that Islamic banking will or will not

gain support and acquire a significant market share if introduced in the area.


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Advent of Islamic Banking in Gombe Local Government Area will enhance healthy

Competition and promote quality service delivery in the Banking sector


Strongly Agree 40 29.85

Moderately Agree 35 26.12

Do not Know 26 19.40

Moderately Disagree 5 3.73

Strongly Disagree 28 20.89

Total 134 100


29.85% of survey participants strongly agree that Islamic banking will enhance healthy competition and

promote quality service delivery in the banking sector of the local government area. 26.12% moderately agree to

that while 3.73% moderately disagree with what the question posed. 20.89% strongly disagree with the question.

19.40% of the respondents do not know if Islamic banking in Gombe Local Government Area will enhance

healthy competition and promote quality service in the banking sector. Taking account of the participation rate

of those who strongly and moderately agree against the position of those who strongly and moderately disagree,

the researcher concludes that Islamic banking if introduced in the local government area can encourage healthy

competition in the banking sector and will promote quality service delivery.

Full Fledged Islamic Banking in Gombe L.G.A. will attract investment from the Mid. East







Total 134 100


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Survey participants where posed with the question of whether they think the coming of Islamic banking in to the

area can attract FDI. Options available to them to choose from ranged from strongly agree to strongly disagree.

29.85% and 25.37% agreed strongly and moderately respectively that advent of Islamic banking is capable of

attracting FDI especially from the Middle East. On the other hand, 5.97% and 15.67% moderately and strongly

disagree respectively with the question that Islamic banking can in fact attract FDI to the area. 23.13% of the

people who took part in the survey do not know if Islamic banking can attract FDI to the area. Based on the

responses received, the researcher hereby concludes Islamic banking has the potential of attracting foreign

investment to the area especially from the Middle East.

Full-fledged Islamic Banking can serve vehicles for fund mobilization in Gombe L.G. A.

This question again was posed by the researcher in order to ascertain the level of perceived economic benefits of

Islamic Banking







Total 134 100


24.63% and 27.61% strongly and moderately agree respectively that with full fledged Islamic Banking in

Gombe local government area, fund mobilization can be enhanced. 9.70% and 17.16% moderately and strongly

disagree respectively with the assertion while 20.91% of survey participants do not know if Islamic Banking in


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Gombe Local Area can serve as vehicle for fund mobilization. Going by the rate of responses given, the

researcher concludes that advent of full-fledged Islamic Banking in Gombe Local Government Area can serve

as a means or vehicle for fund mobilization.

With functional Islamic Banks in Gombe L.GA, more jobs and employment opportunities

will be created







Total 134 100


The result of the survey as shown on the table and graph above reveals that 35.07% of people who took part in

the survey strongly agree that Islamic banking if introduced in Gombe Local Government Area will provide

room for more employment through the creation of more employment opportunities. 23.13% moderately agree

with the assertion, while 12.69% and 14.92% moderately and strongly disagree respectively with the assertion.

14.18% of the participants do not know if the advent of Islamic banking in the local government area is capable

of providing more employment opportunities. Given that majority of the people either strongly or moderately

agreed with the assertion, the researcher concludes as such that the advent of Islamic banking in the area can

create more job and employment opportunities.

Islamic Banking in Gombe L. G. A. will encourage exchange of Expertise







Total 134 100


Results show that 19.4% and 36.57% of the survey participants respectively believe that the advent of Islamic

banking in the local government area will enhance the exchange of expertise while 18.66% and 16.41% of the

participants think otherwise. 18.66% do not know if the introduction of Islamic banking in the area will

encourage the exchange of expertise. Going by the majority, again the researcher concludes that Islamic banking

in Gombe local government area will encourage the exchange of expertise.

Islamic Banks will serve as a means for Financial Inclusion in Gombe L.G.A. This question was posed based on figures of Nation Bureau of Statistics, 2012 which shows that about 70

million Nigerians are financially excluded. The aim of the aim of the question was to ascertain the perception of

people on whether introduction of Islamic Banking can help bring a reduction to that figure.







Total 134 100



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Findings from the survey and as shown on the table and graph above reveal that, 20.89% strongly believe the

advent of Islamic banking can help bring about financial inclusion for the financially excluded. 26.12%

moderately agree that Islamic banking can bring about financial inclusion. 24.63% of the people who took part

in the survey do not know if the advent of Islamic banking can bring about financial inclusion while 11.19% and

17.16% moderately and strongly disagree respectively that Islamic banking can serve as a means for financial

inclusion in the local government area. Based on these responses, the researcher concludes that Islamic banking

can serve as a means for financial inclusion in the local government area.

CONCLUSION

The survey set out to ascertain the people’s perception of the economic viability of Islamic banking in Gombe

local government area. Responses of the people as shown in the paper revealed that the advent of Islamic

banking in the local government area will bring about enormous economic benefits which includes financial

inclusion for the somewhat large number of the financially excluded. Many of the participants also believe that

the advent of Islamic banking in the area will bring about increase in jobs and employment opportunities,

encourage the exchange of expertise and serve as a potential vehicle for fund mobilization. However, in order to

enjoy these economic benefits, there is need for the country’s central bank to intensify efforts tackling such

operational and regulatory challenges that are bound to arise as a result of introducing Islamic banking into the

conventional system. Also, other relevant stakeholders such as licensed Islamic banks should equally intensify

efforts in educating and enlightening the public about Islamic banking, products and services available to the

people in Islamic banking but above all informing the people about the economic benefits that abound with

Islamic banking.

REFERENCES

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