THE CONTRIBUTION OF INTEREST FREE BANKING IN FINANCING OF BUSINESS IN KANO: A CASE STUDY OF JAIZ BANK KANO

ABSTRACT This study examines the contribution of interest-free banking in financing Small and Medium Enterprises (SMEs) in Kano State, with specific focus on TAJ Bank Kano Branch. The research investigates the extent to which non-interest banking supports SME development, the challenges faced by SMEs in accessing funds, and the effectiveness of financing instruments provided by interest-free banks. The study adopted a survey research design, using both primary and secondary sources of data. Primary data were collected through questionnaires administered to selected staff of TAJ Bank Kano. Out of 25 questionnaires distributed, 22 were properly completed and analyzed using descriptive statistical methods. Findings reveal that interest-free banking plays a significant role in supporting SME growth through the provision of Shari’ah-compliant financing facilities. The study also shows that although SMEs benefit from these facilities, challenges such as collateral requirements and access conditions still pose difficulties. Furthermore, the majority of respondents agreed that interest-free banking contributes to capital accumulation and promotes business expansion among SMEs in Kano State. The study concludes that there is a significant relationship between non-interest bank financing and small business growth in Kano State. It recommends that government should create an enabling environment, encourage the expansion of interest-free banking institutions, and support policies that ease access to finance for SMEs. Strengthening awareness and simplifying financing conditions will further enhance the role of interest-free banking in economic development.