The Role of Shari’ah-Compliant Banking in Nigeria’s Economic Growth and Development

Abstract

This research delves into the impact of Islamic banking, guided by Shari’ah principles, on Nigeria's economic advancement. Recognizing its emergence as a pivotal alternative to conventional finance, this study investigates its theoretical foundations, practical implementation, and tangible contributions to Nigeria's economic growth. It meticulously analyses the core principles, such as the avoidance of interest and speculative practices, and contrasts them with traditional banking methods. The evolution of Islamic banking within Nigeria is traced, highlighting its role in expanding financial access, supporting small businesses, funding infrastructure through Islamic bonds, and fostering macroeconomic stability. Despite its potential, the sector grapples with regulatory hurdles, limited public understanding, and liquidity challenges. This analysis also identifies growth prospects, including rising demand for ethical financial solutions, government backing, and the integration of financial technology. Recommendations are offered to strengthen Islamic banking, focusing on policy improvements, public education, the development of diverse financial instruments, and investment in skilled personnel. By examining these factors, this research aims to illuminate the future trajectory of Islamic banking in Nigeria, underscoring its potential to drive sustainable economic progress.