Ethical Finance Introduced to Enhance Credit Access in Nigeria

On Tuesday in Abuja, experts from Nigeria's financial services industry discussed the potential of ethical and non-interest finance to provide alternatives to conventional interest-bearing loans amid high borrowing costs and limited access to affordable credit. The press conference was organized by Open Space Financial Services to unveil its Ethical Finance products.

CEO Titus Ikeh explained that the financing model focuses on transparency, asset backing, and shared ownership, introducing four main structures: Murabaha, Ijarah, Diminishing Musharakah, and Mudaraba. Murabaha involves the financier acquiring an asset for the customer and reselling it at a profit, ensuring transparency in costs.

Ijarah operates as a leasing arrangement, allowing businesses to access equipment without interest-bearing loans. Diminishing Musharakah facilitates joint ownership, where customers gradually buy out the financier's stake.

Mudaraba is an investment arrangement where customers provide capital for Shariah-compliant activities, sharing profits based on a pre-agreed ratio. COO Oscar Ede emphasized the importance of customers understanding their financial obligations and profit-sharing arrangements.