Finance Hub
How sukuk, takaful, murabaha and ijara actually work — in naira, under Nigerian regulation, without the jargon. Free, and open to everyone.
Start here
Three routes through this material, depending on why you are here. Each one takes under an hour.
For anyone who has just encountered the term and wants the shape of it.
For customers, savers and investors comparing their options.
For bankers, analysts, lawyers, students and researchers.
Explainers
Every explainer answers one question, in Nigerian terms, with a worked example in naira.
Non-interest finance is a regulated financial model in which institutions earn returns from trade, leasing, partnership and asset ownership rather than from charging interest. The model, the four prohibitions, and why “interest-free” is a misleading translation.
Read the explainerMurabaha is a cost-plus sale: the bank buys the asset, then resells it to you at a disclosed mark-up payable in instalments. A worked Nigerian example in naira, and an honest cost comparison against a conventional loan.
Read the explainerThree regulators share the mandate: the CBN licenses non-interest banks, the SEC registers Shariah-compliant funds, and NAICOM licenses takaful operators. Who does what, who rules on compliance, and where to complain.
Read the explainerYes — deposits are insured by the NDIC up to ₦5,000,000 per depositor, the same limit as conventional banks, and paid from a separate Shariah-compliant fund. What is protected, what is not, and the investment-account catch.
Read the explainerFurther explainers — sukuk versus bonds, takaful, ijara, mudarabah and Shariah-compliant investing — are in production and will appear here as they publish.
Contracts
| Contract | Family | In plain English | Used in Nigeria for | Who carries the risk |
|---|---|---|---|---|
| Murabaha | Sale | The institution buys the asset and resells it to you at an agreed mark-up, paid in instalments | Vehicle finance, asset finance, trade and inventory finance | The bank owns the asset until sale; the mark-up is fixed and cannot rise |
| Ijara | Lease | The institution owns the asset and leases it to you, sometimes transferring ownership at the end | Equipment, property, vehicle leasing | The bank carries ownership risk and major maintenance |
| Mudarabah | Partnership | One side provides capital, the other expertise; profit shared by ratio, loss falls on the capital provider | Profit-sharing investment and savings accounts | The capital provider bears financial loss; the manager loses their effort |
| Musharakah | Partnership | Both sides contribute capital and share profit and loss in proportion to their stake | Project finance, home co-ownership, SME partnership finance | Shared, in proportion to contribution |
| Wakala | Agency | One party acts as agent for another for a disclosed fee | Treasury operations, investment mandates, takaful fund management | The principal; the agent earns a fee, not a share |
| Salam | Deferred delivery | You pay in full now for goods delivered later | Agricultural finance — paying a farmer at planting for harvest delivery | The buyer carries delivery and price risk |
| Istisna | Deferred delivery | A contract to manufacture or construct, paid in stages against a specification | Construction, infrastructure, project finance | Shared through the build; the maker carries completion risk |
| Sukuk | Certificate | Certificates representing ownership of an asset and the income it produces | Sovereign infrastructure, corporate funding | The holder shares in the asset's performance |
| Takaful | Mutual | Participants contribute to a shared pool; claims paid from it and surplus returns to participants | Motor, engineering, group schemes, credit and mortgage protection, family plans | The pool of participants, collectively |
Every one of these contracts is offered by at least one NIFIAN member. Find an institution
Comparison
| Conventional bank | Non-interest bank | |
|---|---|---|
| How it earns | Charges interest on money lent | Buys, sells, leases or partners — earns profit or rent |
| What it must own | Nothing; it lends cash | The asset, at least briefly, before it can earn |
| If you pay late | Interest compounds on the outstanding balance | The agreed profit cannot increase; any administrative charge is committed to charity rather than booked as income |
| Your return on savings | A stated interest rate | A share of actual profit under mudarabah — indicative, not guaranteed |
| What it can finance | Broadly anything legal | Excludes alcohol, gambling, tobacco and interest-based finance |
| Regulator | Central Bank of Nigeria | Central Bank of Nigeria |
| Deposit protection | NDIC | NDIC non-interest deposit insurance scheme |
| Conventional insurance | Takaful | |
|---|---|---|
| The pool | Premiums become the insurer's income | Contributions stay in a participants' pool |
| Unclaimed money | Retained as shareholder profit | Surplus returned to participants — Hilal Takaful has done so for over seven consecutive years |
| The operator's earnings | Underwriting profit | A disclosed management fee (wakala) |
| Regulator | National Insurance Commission | National Insurance Commission |
Glossary
Every term used on this site, defined in one sentence, with its Nigerian context where that differs from global practice.
32 terms
| AAOIFI The Accounting and Auditing Organization for Islamic Financial Institutions — the Bahrain-based body whose Shariah, accounting, auditing and governance standards define global practice. |
| ACE — Advisory Committee of Experts The independent panel of scholars inside each Nigerian non-interest institution that approves products before launch and audits transactions afterwards. Required by the CBN. |
| Amanah Trust. A holding arrangement in which one party safeguards another's property without using it for profit. |
| Fatwa A scholarly ruling on a point of Islamic law. In Nigerian finance, product-level rulings come from an institution's ACE, not from NIFIAN. |
| FRACE The Central Bank of Nigeria's Financial Regulation Advisory Council of Experts, which sets the national Shariah position for non-interest banking. |
| Gharar Excessive uncertainty or ambiguity in a contract, which renders it invalid. The reason conventional insurance and speculative derivatives are excluded. |
| Halal Permissible under Islamic law. Applied to finance, it describes contracts, income and sectors that meet Shariah requirements. |
| Haram Prohibited. In finance, includes interest, gambling, and financing alcohol, tobacco or other prohibited sectors. |
| Ibra A discretionary rebate granted by an institution when a customer settles a murabaha early. A discretion rather than a right — ask how your institution handles it before signing. |
| IFSB The Islamic Financial Services Board — the Kuala Lumpur-based body issuing prudential and supervisory standards for Islamic banking, capital markets and takaful. |
| Ijara A lease. The institution owns an asset and rents it to the customer, sometimes with ownership transferring at the end of the term. |
| Istisna A contract to manufacture or construct something to specification, paid in stages. Used in Nigeria for construction and infrastructure. |
| Maysir Gambling or speculation. Prohibited, and the reason non-interest institutions do not deal in speculative instruments. |
| Mudarabah A profit-sharing partnership: one party provides capital, the other expertise. Profits are shared by agreed ratio; financial losses fall on the capital provider. |
| Murabaha A cost-plus sale. The institution buys an asset and resells it to the customer at a disclosed mark-up, payable in instalments. The most widely used contract in Nigerian non-interest banking. |
| Musharakah A joint venture in which both parties contribute capital and share profit and loss in proportion to their stake. |
| NDIC The Nigeria Deposit Insurance Corporation, which operates the non-interest deposit insurance scheme protecting depositors at non-interest banks. |
| NIFI Non-Interest Financial Institution — the CBN's term for a licensed institution offering non-interest financial services. |
| Non-interest window A Shariah-compliant operation run inside a conventional bank, with segregated funds. The Alternative Bank began as one in 2014. |
| Purification Removing income that turns out to be interest-based or otherwise prohibited, and donating it to charity rather than booking it as profit. |
| Qard hasan A benevolent loan, repayable at face value with no charge of any kind. Used for hardship and welfare facilities, not commercial finance. |
| Riba Interest, or any unjustified increase on a loan. Its prohibition is the founding principle of non-interest finance. |
| Salam An advance purchase: full payment now for goods delivered later. Used in Nigeria to pay farmers at planting for delivery at harvest. |
| Shariah Islamic law. In finance, the body of commercial jurisprudence governing permissible contracts and income. |
| Shariah-compliant Meeting the requirements of Islamic commercial law, as certified by a qualified advisory body. |
| Sukuk Investment certificates representing ownership of an underlying asset and its income. Nigeria has issued seven sovereign sukuk since 2017. |
| Takaful Mutual protection. Participants contribute to a shared pool, claims are paid from it, and surplus returns to participants rather than to shareholders. |
| Takaful operator The licensed company managing a takaful pool for a disclosed fee. Supervised in Nigeria by NAICOM. |
| Tawarruq A sale arrangement used to generate cash. Permitted by some scholars and restricted by others; treatment varies by institution's ACE. |
| Wadiah Safekeeping. A deposit arrangement in which the institution guarantees the principal and may give a discretionary gift, but promises no return. |
| Wakala Agency. One party acts on another's behalf for a disclosed fee — used in treasury, investment mandates and takaful fund management. |
| Zakat The obligatory annual charitable contribution on qualifying wealth. Several Nigerian institutions assist customers in calculating it. |
No term matches that search.
Primary sources
The actual rules, at the actual source. If you are researching, cite these rather than us.
Build note: link each item to the regulator's own PDF and re-check quarterly. A regulatory library with dead links is worse than none.
Watch and listen
Recordings from NIFIAN's webinar series and industry sessions, plus short explainers.
FAQ
Non-interest finance is a financial model in which institutions earn money by buying, selling, leasing and partnering rather than by lending at interest. Every transaction must be tied to a real asset or productive activity, and the institution must carry some genuine risk before it can earn a return.
Both terms describe the same model. Nigerian regulation uses “non-interest financial institution” because the licence is a financial category, not a religious one, and the products are available to customers of every faith. “Islamic finance” describes the jurisprudential source of the rules.
Not inherently. The cost is structured differently — a disclosed profit mark-up rather than a variable interest rate — and it is fixed at the outset, so it cannot rise during the term. Whether it works out cheaper depends on the transaction, the term and prevailing rates. Compare the total amount payable, not the headline rate.
Yes. Non-interest banks, Shariah-compliant funds and takaful operators in Nigeria serve customers of every faith. The products are regulated financial products, not religious services.
The agreed profit cannot increase, because the price was fixed when the contract was signed — there is no compounding. Institutions may raise an administrative charge covering the actual cost of following up a missed instalment, and under Shariah governance that charge is committed to charity rather than recognised as the institution's income. Speak to your institution early; restructuring is usually possible.
No. The Finance Hub explains how instruments work. It does not recommend products, institutions or investments. For advice, speak to a licensed institution — you will find all nine NIFIAN members in the member directory.
The Finance Hub is published by NIFIAN for general education about non-interest finance in Nigeria. It is not investment, tax, legal or religious advice, and it is not a recommendation to use any product or institution. For advice, speak to a licensed institution and, where relevant, its Advisory Committee of Experts.
Nine licensed institutions offer non-interest banking, ethical investment and takaful in Nigeria.
Find an institutionNIFIAN membership is open to every licensed non-interest financial institution in Nigeria.
Apply for membership