THE CHALLENGES OF ISLAMIC BANKING DEVELOPMENT IN NIGERIA

The licensing of non-interest (Islamic) Banking, by the Central Bank of Nigeria as an alternative banking system to complement the conventional banking system, which has been in existence since the 18th century, has generated heated debate among Nigerians. This is because of the heterogeneous and the ethnoreligious nature of Nigeria as a country. Consequently this article intends to shed more light on the benefits, challenges of Islamic banking system in Nigeria. However, the outcome of the above research reveals that dual banking system which is the practicing of non-interest banking alongside with conventional banking system has emerged as the current order at the global financial system. This financial system is been practiced in the most advance jurisdictions of the world and has been proved to be viable and had contributed immensely to the socio-economic development of these countries, when the system is properly regulated and given the adequate enabling environment to operate. Nevertheless: The main objective of this study was to empirically examine the challenges of Islamic banking in Nigeria with particular reference to Tajbank Ltd, Kano. the major challenges facing the above banking system in Nigeria is the payment of double taxation and lack of comprehensive legal framework to adequately regulate the system among others. It is therefore recommended that a comprehensive legal frame work should be enacted by the Nigerian National Assembly to properly regulate non-interest banking as well as taking urgent steps to amend our tax laws in other to address the issue of double taxation levied on non-interest (Islamic) banks in Nigeria. We used both descriptive and inferential methods of analysis and adopted the non-probability sampling technique because it provides a better opportunity for administering questionnaires directly and individually to the respondents. The major findings of this study are Keywords: Islamic Banking, Financial System, Benefits, Challenges, Prospects.