By Omoh Gabriel
Central Bank of Nigeria (CBN), has formally joined International Islamic Liquidity Management Corporation with an initial investment of $5 million. The investment accords Nigeria the full membership of the body. What is not clear, however, is if the investment has the backing of the Presidency that has the power to approve such investment. At the tail end of Chukwuma Soludo’s tenure, the CBN investment in Africa Finance Corporation became contentious as he was accused of not having Presidential approval for the investment of public funds in AFC. The matter was fully investigated. As at March 2011, there are191 members of the IFSB comprising 54 regulatory and supervisory authorities, seven international inter-governmental organisations and 130 market players, professional firms and industry associations operating in 43 jurisdictions of which the Central Bank of Nigeria is one such regulatory body that has full membership status.

By this development, Nigeria has fully embraced Islamic banking which the CBN had said was non-interest banking it was pursuing. The nine founding members of the IFSB are Bahrain Monetary Authority (now known as the Central Bank of Bahrain), Bank Indonesia, Central Bank of the Islamic Republic of Iran, Central Bank of Kuwait, Bank Negara Malaysia, State Bank of Pakistan, Saudi Arabian Monetary Agency, Bank of Sudan (now known as Central Bank of Sudan) and the Islamic Development Bank.

The CBN Governor Sanusi Lamido Sanusi is a council member of the body. Other members are Chairman, Mohammed Said Shahin Governor Central Bank of Jordan, Deputy Chairman, Rasheed M. Al-Maraj Governor Central Bank of Bahrain,
Dr. Atiur Rahman Governor Bangladesh Bank, Haji Mohd Rosli Haji Sabtu Managing Director Autoriti Monetari Brunei Darussalam, Djama Mahamoud Haid
Governor Banque Centrale De Djibouti. Other members of the council are Dr. Farouk El-Okdah Governor Central Bank of Egypt, Dr. Darmin Nasution Governor Bank Indonesia, Dr. Mahmoud Bahmani, Governor Central Bank of the Islamic Republic of Iran, Dr. Ahmad Mohamed Ali President Islamic Development Bank, Sheikh Salem Abdul-Aziz Al-Saud Al-Sabah Governor Central Bank of Kuwait, Dr. Zeti Akhtar Aziz Governor Bank Negara Malaysi. Also serving as council members are Fazeel Najeeb Governor Maldives Monetary Authority, Rundheersing Bheenick Governor Bank of Mauritius, Sanusi Lamido Aminu Sanusi Governor Central Bank of Nigeria, Yaseen Anwar Governor State Bank of Pakistan, Sheikh Abdulla Saoud Al-Thani Governor Qatar Central Bank, Dr. Muhammad Al-Jasser Governor Saudi Arabian Monetary Agency, Ravi Menon
Managing Director Monetary Authority of Singapore, Dr. Mohamed Khair Ahmed Elzubear Governor Central Bank of Sudan, Dr. Adib Mayaleh Governor Central Bank of Syria, Sultan bin Nasser Al Suwaidi Governor Central Bank of the United Arab Emirates

According to the Islamic Financial Services Board’s web site based in Kuala Lumpur, “Eleven central banks and two multilateral organisations on 25 October 2010 signed the Articles of Agreement for the establishment of the International Islamic Liquidity Management Corporation (IILM) marking their collaboration in a landmark global initiative that is aimed to assist institutions offering Islamic financial services in addressing their liquidity management in an efficient and effective manner. In addition, the initiative would facilitate greater investment flows for the Islamic financial services industry.

“The signatories of the IILM Articles of Agreement are governors and their representatives from the central banks or monetary agencies of Indonesia, Iran, Luxembourg, Malaysia, Mauritius, Nigeria, Qatar, Saudi Arabia, Sudan, Turkey and the United Arab Emirates. The Islamic Development Bank and the Islamic Corporation for the Development of the Private Sector are the multilateral organisations participating. The IILM initiative was facilitated by the Council of the IFSB in line with its mandates to: a) enhance and coordinate initiatives to develop instruments and procedures for the efficient operations and risk management; and b) encourage cooperation amongst member countries in developing the Islamic financial services industry.

“To this end, the IILM will issue high quality Sharī`ah-compliant financial instruments at both the national level and across borders, in an integrated manner, thereby enhancing the soundness and stability of the jurisdictions in which they operate. The IFSB is an international standard-setting organisation with the objective to promote and enhance the soundness and stability of the Islamic financial services industry (IFSI) by developing global prudential standards and guiding principles for the IFSI, broadly defined to include banking, capital markets and insurance segments. The IFSB also conducts research and coordinates initiatives on industry related issues, as well as organises roundtables, workshops, seminars and conferences. According to the Islamic body: “The IFSB has membership of international, regional and national organisations and market players who share its objectives. The IFSB welcomes organisations with similar aspirations to contribute their knowledge, expertise and resources as IFSB members. The IFSB has three categories of membership: Full, Associate and Observer.”

According to the body, “Full membership is available to the supervisory authority responsible for the supervision of the banking industry, securities and/or insurance/Takâful industries of each sovereign country that recognises Islamic financial services, whether by legislation or regulation or by established practice and international inter-governmental organisations that has an explicit mandate for promoting Islamic finance.

“The Islamic Financial Services Board (IFSB) had in Washington on 7 October 2010 facilitated the signing of the Memorandum of Participation for the establishment of the International Islamic Liquidity Management Corporation (IILM). The primary objective of the IILM is to issue Sharī`ah-compliant financial instruments in order to facilitate more efficient and effective liquidity management solutions for institutions offering Islamic financial services (IIFS), as well as to facilitate greater investment flows of Sharī`ah-compliant instruments across borders. This initiative is in line with the IFSB mandates (as stated in its Articles of Agreement) to: a) enhance and coordinate initiatives to develop instruments and procedures for the efficient operations and risk management; and b) encourage cooperation amongst member countries in developing the Islamic financial services industry.

“Governors and representatives of a number of central banks and multilateral organisations that are members of the IFSB participated in the signing ceremony of the Memorandum of Participation. The ceremony was held on the side of the IMF-World Bank Annual Meetings in Washington DC. The establishment of the IILM is a major breakthrough in the Islamic financial industry development as it will provide liquid short-term Sharī`ah-compliant instruments that would promote further the competitiveness and resilience of IIFS globally.

The Council of the Board (IFSB) on Thursday 17th November resolved to appoint its Chairman and Deputy Chairman for the year 2012. The Governor of the Central Bank of Bahrain (CBB), H.E Rasheed Mohammed Al Maraj will resume the Chairmanship of the Council of the IFSB from the current Chairman, H.E Mohammed Said Shahin of the Central Bank of Jordan. The Governor of the Qatar Central Bank, H.E. Sheikh Abdullah Saoud Al-Thani will be Deputy Chairman. The new appointments will be effective in January 2012.

H.E Rasheed Mohammed Al Maraj was appointed as the Governor of the CBB in January 2005. As Governor, Mr. Al Maraj carries ministerial ranking and is the chief executive of the CBB, which is responsible for ensuring monetary and financial stability in Bahrain. Prior to his appointment as CBB Governor, Mr. Al Maraj was General Manager and Chief Executive Officer of the Arab Petroleum Investments Corporation (Apicorp), based in Dammam, Saudi Arabia. H.E. Sheikh Abdullah Saoud Al-Thani was appointed as the Governor of Qatar Central Bank in May 2006. He was Deputy Governor during 1990-2001 and was the Chairman of the State Audit Bureau from 2001-2006, prior to assuming the leadership of the central bank. He is also Chairman of the Board of Directors of Qatar Development Bank as well as a member of the Board of Directors of Qatar Investment Authority.

“The Chairmanship of the IFSB Council is on an annual rotational basis. From 2003 to 2010, the rotation was amongst the Founding Members of the IFSB who signed the Articles of Agreement when the IFSB was established in November 2002. Thereafter, the Chairmanship alternates between Founding and Non-Founding Members within the IFSB Council. This is therefore, the second time the chair is with Bahrain. H.E Sheikh Ahmad Al Khalifa, then Governor of Bahrain Monetary Agency was the inaugural Chairman of the IFSB Council for 2003.