A Rare Bird Flutters into SME World Flourishing in Nigeria: ‘Win-Win’ Financing Options

Jaiz Bank Ltd has taken tiny operations to thriving businesses with its innovative Shariah banking model.

The Nigerian financial sector’s long-standing need for an alternative banking model has finally been met.

Jaiz Bank Plc, Nigeria’s first Islamic bank was founded for citizens who prefer the non-interest transaction-and-investment option.

Customers of conventional banks, especially those in the Northern region of the country, had been eager for an option that enables responsible and ethical trading.

Jaiz does just that, delivering services for retail, commercial, and corporate sectors. It offers a wide-range of products, from transactional accounts and term savings to working capital, real estate, personal, medical, education and project finance. Also provided are online banking services, leasing, bank cards, bonds and guarantees.

“Nana Firdausi Habib, an entrepreneur well-known for her social media promotion of her business, was able to expand her empire with Jaiz SME financing.”

The bank caters for myriad needs across its 50 national branches, with a diverse clientele across the region. In over 12 years of operations, Jaiz has weathered the twist and turns of the challenging and dynamic economic landscape. In its fourth year, it began to show impressive year-on-year performance, and profit across key financial metrics and initiatives.

In its second quarter report for 2024, Jaiz Bank declared impressive earnings, with a gross income of N12.47 bn ($76m), up from N8.40 bn in 2023. Net income was N5.43bn, compared to N2.17 billion a year ago. Basic earnings per share from continuing operations was N 0.15 compared to N 0.063 in 2023.

For the first six months in 2024, gross income was N23.06 bn ($1.4bn), and net income was N11.28 bn. Basic earnings per share from continuing operations was N 0.32.

In line with the bank’s driving objective of economic resuscitation, SMEs — which account for 96 percent of businesses and 84 percent of employment in Nigeria — began to access funding through consolidated financing.

It was time for the bank to channel investments towards stimulating local business and fostering financial inclusion. An increasing number of Nigerian SMEs are now reporting profits and proceeds from the supplementary income they received from Jaiz Bank financing.

A 33-year-old trader, cobbler Abdulbasit Muhammad Auwal, started his shoe-making business with just N100,000 years after graduating from the university. He had been unable to find a white-collar job.

“I had to wait for a year before I was mobilised for the National Youth Service Corps (NYSC),” he says. “I asked a cobbler who made my shoes to engage me as apprentice. I told him that people always admire my shoes and that I thought I could start selling them. That’s how it all began.”

After learning the skills of the trade, Auwal started out alone, producing shoes himself — and eventually taking on his own apprentices. “Now I have 10 staff, and others are being trained,” he says. He credits Jaiz Bank for his success. And he is not alone; many other citizens have benefited from Jaiz Bank’s non-interest facilities, growing their businesses, being supported and lifted out of poverty.

Nana Firdausi Habib, an entrepreneur well-known for her social media promotion of her business, was able to expand her empire with Jaiz SME financing. From supplying kitchen utensils and appliances to delivering luxury furniture, Habib experienced a surge in profits. She used the facility to acquire new products.

“My line of business is interior décor accessories,” she explains, “which I import directly from Turkey and China. The niche is purely online, with delivery to every nook and cranny of the country.” Her initial business capital came family members. “Then I got a facility from Jaiz Bank, and we were able to expand.”

The bank is also stimulating the agricultural sector, most notably by financing a 10,000ha irrigation system at Udubo, Gamawa, Bauchi State. Tiamin Rice Ltd is just one of several Jaiz Bank customers in the sector to benefit from its investment initiatives.

The Nigerian financial sector’s needs have indeed been met — and the country’s SME sector is booming.