Disturbingly these ranged from vitriolic Islamophobic rants which linked Islamic finance to terrorism financing and forebodes the transformation of Nigeria into a new Jihadist haven, to flattering admiration for Mallam Lamido Sanusi, the governor of CBN, for rising above the critics and facilitating the introduction of Islamic finance under financial inclusion policy. The few voices that saw Islamic banking as an alternative form of financial management to the interest-based capitalist conventional system and more connected to the real economy and with a potential to contribute to development in Africa's most populous country for the benefit of all Nigerians, hardly had a look in.

It would be unfair to draw generalizations from such a sample of comments, but in relation to recent statements from various groups and the sensitivity of the CBN over the matter, it becomes apparent that under the surface Nigeria is a highly sectarian society, which is further fuelled by the constant reinforcement of stereotypes on all sides of the ethnic and religious divides. Nigeria has a population of about 170 million which is roughly half Muslim and half Christian.

This is unfortunate because Nigeria in general is a highly educated society but with huge developmental challenges because of governance shortcomings in which the military have had a pervasive influence since independence, endemic corruption and economic mismanagement.

In June, the Dioceses in the Church of the Nigeria Anglican Communion appealed to the country's House of Representatives and the Senate not to pass any legislation to facilitate Islamic banking in the country on the grounds that it would pose a serious threat to the unity of the federation; it would violate the country's secular constitution; and favor one particular religious group.

Predictably, the Muslim Rights Concern (MURIC) of Nigeria weighed in, stressing the constitution guarantees freedom of religion to all Nigerians and that denying the establishment of Islamic banks would deny some Nigerians the right to have access to financial services based on their faith tradition, or alternatively force them to become unbanked or to use interest-based banking.

The tragedy is that the debate on Islamic banking is based on fundamental misconceptions about what is Islamic finance. The common one is that it is religious banking supervised and controlled by the Mullahs or Ayatollahs. As such, its sole purpose is to advance the ascendancy of Islam in that society at the expense of marginalizing the other faith groups. Another misconception is that it is a front for funding terrorist groups and for the subjugation of Muslim women.

Unfortunately the Islamic banking movement has spectacularly failed to articulate the phenomenon as an alternative system of fiduciary financial management which is far more connected to financing the real economy because of its emphasis on risk sharing, profit-and-loss sharing, and proscription on interest (usury), speculation based on gambling, and deception in a transaction where parties do not have equal access to information on that transaction.

The irony is that the latter provisions are not confined to Islam as a faith, but have their roots in the Abrahamic faiths. Indeed usury is proscribed in various forms in Judaism and in Christianity. In fact, they used to burn those who were guilty of charging usury at the stake during the times of the Ecclesiastical Churches. Also other faith traditions such as Buddhism and Hinduism also have provisions which govern financial activity.

The reality is that many non-Muslim jurisdictions have introduced laws or amendments to laws to facilitate Islamic finance not because for religious reasons but precisely because it is an alternative form of financial management and therefore a choice for customers, irrespective of their faith. At the same time it is also a manifestation of financial inclusion for those who indeed prefer access to financial products in line with their faith.

The Financial Services Authority (FSA) in the UK is adamant that it is a secular regulator, and all financial services activity must satisfy the provisions of the UK Banking Act. If those provisions then also satisfy those of an alternative system, then there is nothing under UK law that would prohibit such activity. Not surprisingly, the UK law or amendments in the various finance bills talks about alternative financing schemes such as for home purchase plans, current accounts, leasing and alternative financial investment bonds (sukuk). The word “Islamic” is completely absent. The amendments largely deal with tax neutrality to create a level playing field in taxation for equivalent products.

In fact, it is the stated policy ambition of past administrations and the current coalition government of Prime Minister David Cameron to develop London into an international hub for Islamic finance, investment and trade.

If the UK, France, Luxembourg, Hong Kong, Singapore, Sri Lanka, South Africa, Kenya and other countries - all Non-Muslim - can facilitate the introduction of Islamic or alternative financial products, why can't Nigeria?

Islamic banking as the experience in Malaysia has shown is open for all who are interested in ethical and socially responsible investment and savings and not just for Muslims. Some the clients of Malaysian Islamic banks are majority non-Muslim Chinese, not because of religious sentiments but because they have found these products competitive and ethical alternatives.

In Nigeria, the CBN has given a provisional license to Jaiz International Bank in June 2011 to establish a bank that would operate entirely under non-interest principles but also under the provisions of the Banks and Other Financial Institutions Act (BOFIA). The promoters of Jaiz International Bank have six months to fulfill these requirements which deal largely with capital requirements of a minimum of 25 billion Naira and of management that pass the “fit and proper” test, apart from the business plan of the bank.

There is nothing stopping a Nigerian Christian investor from acquiring an equity stake in Jaiz International Bank, even if it is a token minority stake. There is nothing stopping Nigerians of all faith traditions from opening accounts with the bank, and attending annual general meetings if they are shareholders or investors. In fact, any discrimination in this respect would be contrary to Nigerian law and to the new guidelines just issued.

In the UK, the Islamic Bank of Britain has a few Christian and other shareholders and customers.

It is understandable that the urbane CBN Gov. Sanussi has an unenviable task given that he is a Muslim who comes from a prominent family, for he is the grandson of the Emir of Kano. In the morass of Nigerian politics the fact that he is presiding over the authorization of the first Islamic bank has immediately been seen by his staunch detractors as the implementation of a “Northern agenda” in Nigerian polity.

"On the allegation that the governor is introducing Islamic banking as part of the alleged "Northern Agenda", explained the CBN in an earlier statement, "the fact is that Islamic banking/non-interest banking (or whatever it is called) has already been approved by the CBN during the tenure of Professor Chukwuma C. Soludo (a Christian southerner). In fact, provisions of the Banks and Other Financial Institutions Act (BOFIA) 1991 as amended, Sections 9, 23 and 52 provided for the establishment of Islamic banking in Nigeria. Consequent upon this, the former Habib Bank was given an approval in 1992 to operate a window of Islamic banking which is still operational with Bank PHB. The approval by the CBN under Soludo saw the emergence of the proposed JA'IZ Bank which has been working to raise 25 billion naira capital base as required (under BOFIA). It is obvious therefore that Islamic banking was already in Nigeria years before Sanusi Lamido Sanusi became the governor of the Central Bank of Nigeria."

Several other Nigerian banks including Christian-owned ones are seeking to introduce interest-free financial products to service both their Muslim and non-Muslim clients. Their view is that Islamic finance is now part of the international financial system, albeit it a small niche, and that its has its merits purely as an alternative system of financial management as opposed to the market-based conventional system whose excesses so nearly caused the collapse of the global banking system in the recent financial crisis.

The danger is that the CBN is seen as reacting to events all the time rather than setting the agenda for the banking and financial sector in the country. This weakens the position of any incumbent Governor of the CBN especially if guidelines issued a few months earlier are changed for the most trivial of reasons.

The latest guidelines issued on 21 June are the outcome of the review of the earlier guidelines issued based on the recommendations of various stakeholders.

The new guidelines clarify "the contextual definition of non-interest banking which is not restricted to Islamic banking, but also include other forms of non-interest banking not based on Islamic principle. This is in accordance with the provisions of Banks and Other Financial Institutions Act (BOFIA) which clearly provides for the two variants of non-interest banking. This ensures that discrimination on any grounds in the participation by individuals or institutions as promoters, depositors or other relevant parties in any transaction regarding a non-interest financial institutions, whether based on Islamic or other model, is strictly prohibited."

The new guidelines also remove any reference to Shariah councils or boards, which is an extra tier of ethical compliance. Instead these will be changed to Advisory Council of Experts whose responsibility is to advise the CBN on the appropriateness of relevant financial products to be offered by the institutions.

"For the avoidance of doubt, section 23 (1) and section 66 of the BOFIA 1991, (as amended), explicitly provide for the licensing of Non-Interest Banks (NIBs). The CBN is obliged, by law, to issue licenses to appropriate entities for the establishment of NIBs provided they meet the regulatory requirements for licenses. In view of this, the CBN is open to receiving and evaluating applications for licensing of non-interest banking institutions based on other principles rather than the Islamic variant and will soon issue separate guidelines for non-interest banking under other principles," concluded the guidelines.