Islamic Finance and Financial Inclusion in Nigeria: A Systematic Literature Review

Abstract

Financial inclusion is given priority by policy makers, regulators and development organizations as it promotes economic development, alleviates poverty and inequality, fosters inclusive development, cuts down extreme poverty and enhances the quality of life. Besides, Islamic finance has been an important source of enhancing access to credit by the poor vulnerable. This paper will be a review of the existing literature to provide an overview of the efforts of Islamic finance in enhancing financial inclusion in Nigeria. Through the analysis it is established that Islamic finance makes the process of financial inclusion better as it is a better system of risk sharing and provides financial products in a Shari’ah compliant manner. Thus, Islamic finance helps in reducing severe poverty and voluntary financial isolation. The paper suggests amongst others, the need for government to support financial inclusion by creating suitable frameworks for supervision and regulation, financial inclusion plans, consumer protection measures, advancement of financial literacy as well as sustain its initiatives of promoting financial and consumer education. Further, the need for our Islamic financial institutions to sustain the use of risk-sharing financial products including Waqaf, Sadaqah and Zakat since they improve financial inclusion and reduce poverty is also suggested.