The role of Islamic social finance instruments in providing services in Nigeria

This study examines the role of Islamic social financial instruments in providing services by Islamic faith-based organizations (IFBOs) in Southwest Nigeria. All over the world, governments of every sovereign nation are responsible for providing quality social services such as security, education and healthcare to the people because these services are fundamental human rights. Unfortunately, the crisis of bad governance has engendered ineffective service delivery in both rural and urban areas of low/medium-income countries. A vast number of Muslims are nationals of low- and middle-income countries such as Nigeria. Bad governance has led to poor human development. This poor human development has led to contributory factors such as accentuated poverty, diseases, high infant mortality rates, low literacy rates, crime and hopelessness among the citizens. To bridge the governance gaps created by the inability of governments to meet the basic social service needs of their citizens, the United Nations came up with the Sustainable Development Goals (SDGs): “Transforming our world: the 2030 Agenda for Sustainable Development”. The SDGs aim at solving ongoing global challenges such as poverty, hunger, education, gender equality, clean water, economic development, infrastructure development, inequality and sustainable communities, among other things. Civil societies including faith-based organizations (FBOs) can intervene to augment the role of government to provide services to the impoverished or deprived. This study investigated IFBOs’ potential to help in the provision of services to the poor.

A critical review of relevant literature on FBOs was made to provide the study with a dominant narrative and debate on the role of FBOs. The few studies on FBOs in Nigeria report that their role is largely unacknowledged, under-reported and poorly researched. Some studies portray Christian FBOs as the most active, efficient and effective because, apparently, they have links with local and international donor agencies. This thesis challenges the present narratives by examining the use of Islamic social financial instruments such as Zakah, Sadaqah and Waqf by IFBOs in the provision of social services in Southwest Nigeria. Hence, the research question: “How do Islamic faith-based organizations deliver social services to the poor in Southwest Nigeria?”

To provide an answer to the research question, 147 IFBOs were identified through a short survey (ten questionnaires) (See Appendix: 1-1) and were contacted by telephone to elicit their participation in the fieldwork. Thirty-three case study documents and 28 in-depth interviews were conducted with leaders of eight IFBOs whose services were relevant to the research question and objectives. Out of the 28 interviews conducted, 23 were administered for the selected three case study IFBOs. Qualitative data from the three main IFBOs was analysed using Auerbach’s six-step approach of coding and analysis to understand the role of IFBOs in the provision of social services to selected deprived areas in Southwest Nigeria. A small-scale survey (90 questionnaires) was also analysed to validate the findings of the qualitative data. Arising from the review of literature, the stakeholder theory provided the required theoretical grounding for the study. The study adopted both qualitative and quantitative research methods relying on documents, interview and survey questionnaires as techniques for data gathering from primary sources. The target population for the study was the IFBOs in the Southwest of Nigeria. In the absence of a sample frame of all IFBOs in the Southwest, a sample size of three IFBOs (The Muslim Congress [TMC], Nasrul-Lahi-L-Fatihi Society of Nigeria [NASFAT] and Ansar-Ud-Deen Society of Nigeria [ADS]) were selected with justification using purposive sampling. The data from the official documents and interviews were analysed using content and narrative analyses.

The first finding reveals that faith in the Unseen God and the need to forge a self-help collective effort were the two major factors that accounted for the IFBOs’ concern about the social and economic well-being of the poor and needy. In addition, religious and socio-economic factors also motivated IFBOs into fund-raising activities for the provision of access to social services. The second finding indicates that funding strategies used by IFBOs to improve access to social services in Nigeria include Zakah (compulsory), Sadaqah (voluntary donations), Waqf (endowment), impromptu payments (collected at meetings/social occasions), and levies for special projects and gifts. The third finding indicates that IFBOs in Southwest region of Nigeria use a variety of organizational structures to carry out their operations. There are two-strands of operational structures in IFBOs: (a) the Windows model and (b) the Stand-Alone model of IFBOs. While the Windows model maintains a vertical relationship with their parent bodies, Stand-Alone IFBOs maintain horizontal relationship with them. The fourth finding reveals that challenges faced by IFBOs in implementing their social services intervention programmes/projects are impatience/intolerance of beneficiaries, demands being more than supply, inadequate funding, instability of exchange rate, a dearth of full-time staff and dedicated volunteers, slow decision-making processes, multiple government taxes, apathy among philanthropists and hostile communities.

The study has therefore contributed to a better understanding of the role of Islamic financial instruments in the provisions of social services: an area that is largely under researched in Nigeria. The study concludes with a discussion of the academic and practical implications of the findings, as well as recommendations for further research in this multidisciplinary field.