Dear Olayinka,
Why Islamic Banking is Interest Banking, in a Different Dress:
Having seen the back and forth between yourself and the Chief, I've been instructed to give an extensive answer as this is a topic he is extremely knowledgeable about.
Per [ZE's Economic Analysis and Research Outfit Zero Equilibrium's] (
@0Equilibrium ) estimate for 2025–2026, “profit sharing” averaged between 15% and 30%, depending on; scale, risk, duration, volume, sector and company specific risk assessment (inflation, liquidity, insolvency and exchange rate risks). Fidelity Bank (and other conventional interest-based banks) “interest rates” ranged from 20%-35%.
[ZE's estimate is inferred from the Banks financial statement, we derived the average profit rates from the Banks Income Statement - it's publicly available- First we subtracted the cost of funds from financing income (Revenue) to get the net finance margin. Feel free to challenge me this methodically, I always concedde to data or superior data analysis.]
Same Objectives and Outcomes, Different Contractual Language/Formating:
Now, since the resulting pricing often almost converge, (ormore accurately are within inches of each other) cause again, they have to price in the same risks. Whilst Fidelity is looking for your deposit to pay you an interest lower than TBills and bonds, Jaiz is also raising a variant of Musharakah financing to invest in FG Sukuk Bonds then sharing the "profit" with the customer just like fidelity.
[Fun fact, for over almost half a decade, FG Sukuk Bond Yields have been fixed (please fact check me. Meaning the only difference between FGN Sukuk and NTBs and Interest Bonds is the name, liquidity, duration and flexibility. What business did the FG and Islamic Insitituional, Retail and Individual Investors/Customers who's funds were used. Surely you must now concede to superior knowledge]
Identical (Outcome) Foundational Mechanics:
With the average lower and higher band in the past 360 days for both banks are literally just 5% apart, and with similar risk assessments made to arrive at that rate (profit sharing or interest rates), Jaiz Bank is basically not too foundationally dissimilar from fidelity.
One has a standardized process, the other am variable one, but the share of your income paid either as interest or profit sharing are not only close on average but also determined in similar ways. But the Methodology differs only in the contract language and structure.
Same Risks to Evaluate and Price Money(Loans):
Both Fidelity and Jaiz Bank bear the same risk. And have the same goal, with similar rules applied in both instances where a borrower is softening.
No Islamic Bank is forgiving a loan entirely except the company goes bankrupt. Same with commercial banks. If you don't a make profit, and go bankrupt, you're covered by law.
If you're just having a downtime both institutions (Jaiz and Fidelity) would provide ext nations, or even take concessions.
So tell me again, how are they different in essence again? For they are foundationally similar in outcome, despite the contractual divergence.
Irrefutable Fact:
Islamic and conventional banking are structurally different, but very much more economically similar, if not identical, than many proponents of either system are willing to admit.
— Zero Equilibrium® Economics.
You have no simple idea of Islamic economics and finance just sit it out with the grandstanding