Ibrahim Muhammad

ABSTRACT The growth of Islamic Financial Institutions (IFIs) in Nigeria signifies a rising demand for ethical and Shari’ah-compliant financial services. However, the development of an effective Shari’ah governance framework, which is vital for ensuring that all operations align with Islamic legal principles, remains underdeveloped. This study critically examines the existing structure of Shari’ah governance in Nigerian IFIs, highlighting core challenges such as the absence of standardized regulatory guidelines, limited autonomy of Shari’ah boards, inadequate coordination among regulatory bodies, and capacity gaps in Shari’ah scholarship. These issues collectively undermine public trust, compromise financial integrity, and hinder the sector’s credibility and growth. Drawing on global best practices from jurisdictions like Malaysia, Bahrain, Pakistan, and Sudan, the paper identifies transferable models that can guide the reform of Nigeria’s Shari’ah governance ecosystem. Key recommendations include establishing a centralized Shari’ah Supervisory Authority, harmonizing legal and institutional frameworks, promoting capacity-building programs, and adopting international standards such as those issued by AAOIFI and IFSB. Strengthening Shari’ah governance is essential not only for regulatory consistency and consumer protection but also for positioning Nigeria as a viable hub in the global Islamic finance industry. This research contributes to the ongoing discourse on Islamic financial regulation by proposing actionable strategies tailored to the Nigerian context. 1. Introduction Background to Islamic Finance in Nigeria Islamic finance has witnessed remarkable growth in Nigeria over the past decade, reflecting a broader global trend toward ethical and Shari’ah-compliant financial practices. This growth is principally fueled by the increasing demand from Nigeria’s sizable Muslim population for financial services that conform to Islamic ethical principles. Central to Islamic finance is the prohibition of riba (interest), gharar (excessive uncertainty), and maysir (speculation), which distinguish it fundamentally from conventional financial systems. These prohibitions aim to promote fairness, transparency, and risk-sharing in financial transactions, thereby fostering economic justice and social welfare1. The formal inception of Islamic finance in Nigeria is often marked by the licensing of Jaiz Bank in 2011, which became the country’s first full-fledged Islamic bank. Since then, the industry has expanded to encompass a variety of players, including specialized non-interest financial institutions, Islamic banking windows operated by conventional banks, and takaful companies offering Shari’ah-compliant insurance products2. This diversification illustrates the growing acceptance and integration of Islamic finance into Nigeria’s broader financial landscape. Regulatory support for this emerging sector has been developing gradually. Key institutions such as the Central Bank of Nigeria (CBN), the Nigeria Deposit Insurance Corporation (NDIC), the Securities and Exchange Commission (SEC), and others have introduced guidelines and frameworks designed to facilitate the operation of Islamic financial institutions (IFIs) within the country’s regulatory environment3. Despite these advances, the regulatory architecture remains somewhat fragmented and nascent, especially concerning Shari’ah governance. The absence of a comprehensive and standardized Shari’ah governance framework poses challenges to ensuring consistent compliance with Islamic principles, which in turn affects the credibility, transparency, and growth potential of the sector4. Thus, while Nigeria’s Islamic finance industry shows promising growth and potential, the development of a robust, harmonized Shari’ah governance structure remains critical. Strengthening governance is necessary not only to safeguard the industry’s adherence to Islamic ethics but also to build investor confidence and position Nigeria competitively in the global Islamic finance arena5. Importance of Shari’ah Governance in IFIs Shari’ah governance refers to the set of institutional and organizational arrangements through which IFIs ensure compliance with Islamic law in their operations, products, and services.6 An effective Shari’ah governance framework is essential not only to protect the maqasid al-Shari’ah (objectives of Islamic law) but also to promote investor confidence, market discipline, and financial stability.7 Inadequate Shari’ah governance can result in reputational risks, legal uncertainty, and systemic instability within the Islamic financial system. Research Problem and Objectives Despite the growth of Islamic financial institutions in Nigeria, there remains a conspicuous absence of a standardized and robust Shari’ah governance framework. Issues such as unclear regulatory roles, limited capacity of Shari’ah committees, lack of centralized oversight, and inadequate training of Shari’ah scholars continue to plague the sector.8 This study aims to: Examine the current state of Shari’ah governance in Nigerian IFIs. Identify key structural and operational challenges. Analyze the implications of governance weaknesses on stakeholders and the industry. Explore global best practices and evaluate their applicability in the Nigerian context. Recommend policy options to strengthen Shari’ah governance in Nigeria. Methodology and Scope of the Study This study adopts a qualitative and comparative legal research methodology. Primary data sources include regulatory documents, guidelines issued by the CBN, NDIC, and SEC, as well as standards by international bodies like the AAOIFI and IFSB. Secondary data includes academic journal articles, case studies from selected jurisdictions, and expert commentary.9 The scope of the study covers Islamic banks, takaful operators, and other Islamic finance institutions operating under Nigerian jurisdiction, with comparisons drawn from Malaysia, Bahrain, Pakistan, and Sudan. 2. Conceptual Clarifications and Theoretical Framework Definition of Shari’ah Governance Shari’ah governance refers to the set of institutional arrangements and processes adopted by Islamic Financial Institutions (IFIs) to ensure that all their operations, products, and services comply with Islamic law (Shari’ah). The Islamic Financial Services Board (IFSB) defines Shari’ah governance as a system that encompasses oversight, review, and audit functions conducted by Shari’ah boards to safeguard compliance with the principles and rulings of Islamic jurisprudence.10 It is a multi-layered structure that integrates both religious and corporate governance responsibilities, ensuring that the IFI maintains a balance between commercial viability and spiritual compliance. Key Components of a Shari’ah Governance Framework A robust Shari’ah governance framework typically comprises the following key components: Shari’ah Supervisory Board (SSB): An independent body of qualified scholars responsible for issuing fatwas and overseeing compliance. Internal Shari’ah Compliance Unit: Staff members embedded within the IFI who monitor day-to-day operations for conformity with Shari’ah rulings. Shari’ah Review and Audit Functions: Periodic internal and external evaluations of product development, contractual processes, and reporting practices. Legal and Regulatory Backing: National legal systems and financial regulators must provide the institutional legitimacy for the framework to operate effectively.11 These components ensure that Shari’ah decisions are not only made but enforced, verified, and disclosed appropriately to stakeholders. Theoretical Models: Agency Theory, Stakeholder Theory, and Institutional Theory in Governance Three core governance theories offer important insights into how Shari’ah governance frameworks can be conceptualized and strengthened in practice: Agency Theory highlights the potential conflict between shareholders and management. In the context of IFIs, Shari’ah boards serve as a mechanism to mitigate such conflicts by acting as religious watchdogs to protect shareholders’ interests in compliance with Islamic principles.12 Stakeholder Theory expands the responsibility of IFIs beyond shareholders to include depositors, customers, regulators, and the wider Muslim community. Shari’ah governance, from this perspective, becomes a means of ensuring that the ethical and social values of Islam are upheld in financial activities.13 Institutional Theory examines how organizational behavior is shaped by norms, rules, and cultural expectations. The Shari’ah governance structure of IFIs must therefore align not only with religious norms but also with evolving regulatory standards and international best practices.14 Each of these theories helps illuminate different aspects of why strong Shari’ah governance is essential, especially in jurisdictions where Islamic finance operates within a dual financial system, such as Nigeria. Relationship Between Shari’ah Compliance and Financial Integrity There is a direct and critical relationship between Shari’ah compliance and the overall financial integrity of IFIs. Non-compliance with Shari’ah rulings can lead to reputational damage, withdrawal of deposits, regulatory sanctions, and loss of market credibility.15 Moreover, compliance ensures that financial products remain free from impermissible elements such as riba, gharar, and unethical practices, thereby enhancing transparency, trust, and ethical alignment with stakeholders. In emerging Islamic finance markets like Nigeria, strengthening Shari’ah governance is essential for ensuring sustainability, financial inclusion, and legitimacy in the broader economic system.16 3. Overview of Shari’ah Governance in Nigerian IFIs Historical Development of Islamic Finance in Nigeria Islamic finance in Nigeria traces its roots to informal community-based cooperative models practiced in predominantly Muslim regions. However, its formal institutionalization began in the early 2000s, catalyzed by regulatory interest in diversifying the financial system and expanding financial inclusion. The landmark moment came with the licensing of Jaiz Bank Plc in 2011 as Nigeria’s first full-fledged Islamic bank.17 This was followed by other developments, including the introduction of non-interest windows in conventional banks and the issuance of sovereign Sukuk by the federal government in 2017.18 These milestones demonstrated increasing acceptance of Islamic finance as a viable alternative within Nigeria’s dual banking system. Nevertheless, the evolution of Shari’ah governance mechanisms has lagged behind financial product innovation. Legal and Institutional Framework Supporting Shari’ah Governance Nigeria’s legal system, being a pluralist mix of English common law, Islamic law, and customary law, provides a complex environment for Shari’ah governance. The principal legal backing for Islamic finance and Shari’ah compliance comes from several regulatory guidelines rather than a standalone legal framework. The Central Bank of Nigeria (CBN) issued the Guidelines on Non-Interest Financial Institutions (NIFI) in 2011, which provides some regulatory oversight for Shari’ah governance.19 However, the framework lacks comprehensive provisions detailing the structure, independence, and enforcement authority of Shari’ah Supervisory Boards (SSBs). In contrast to jurisdictions like Malaysia, Nigeria does not yet have a centralized national Shari’ah advisory body or a codified Shari’ah governance code embedded in law.20 Role of Key Stakeholders (CBN, NDIC, SEC, NAICOM, ACEs) Multiple regulatory institutions share overlapping responsibilities in the governance of Islamic financial institutions in Nigeria: Central Bank of Nigeria (CBN): As the primary regulator, it oversees Islamic banking operations, licensing, and compliance requirements. It mandates that each non-interest financial institution have an internal Shari’ah advisory committee.21 Nigeria Deposit Insurance Corporation (NDIC): Responsible for insuring deposits in Islamic banks through a special non-interest window, it also plays a role in risk management and resolution of failed institutions.22 Securities and Exchange Commission (SEC): Oversees Islamic capital market activities, particularly Sukuk issuance and compliance with ethical investment standards. National Insurance Commission (NAICOM): Regulates Takaful (Islamic insurance) institutions, ensuring alignment with both Shari’ah and insurance laws. Accrediting and Certifying Entities (ACEs): Academic and professional institutions like IIIBF (International Institute of Islamic Banking and Finance) in Bayero University Kano provide certification, training, and capacity building for Shari’ah scholars.23 Despite these efforts, the lack of harmonized standards and coordination among these bodies often leads to regulatory fragmentation, creating compliance ambiguity for Islamic financial institutions. Institutional Arrangement of Shari’ah Boards in Nigerian IFIs Most Islamic financial institutions in Nigeria operate with Internal Shari’ah Advisory Committees (ISACs), composed of three to five scholars with backgrounds in Islamic jurisprudence and finance. Their functions include reviewing product structures, issuing fatwas, and ensuring that the institution’s operations align with Shari’ah principles.24 However, these boards often suffer from structural limitations such as inadequate independence, lack of standardized procedures for fatwa issuance, and limited disclosure of decisions. Additionally, most institutions do not publish their Shari’ah reports or conduct external Shari’ah audits.25 Another concern is the scarcity of qualified Shari’ah scholars with both fiqh and financial training, which limits the effectiveness of the governance process. The absence of a central Shari’ah board or advisory council further hampers consistency across the industry, as each institution develops its own interpretations and standards.26 4. Critical Issues in Shari’ah Governance Framework Lack of Standardized Shari’ah Governance Guidelines A major challenge facing Islamic Financial Institutions (IFIs) in Nigeria is the absence of a unified, enforceable Shari’ah governance framework. While the Central Bank of Nigeria (CBN) has issued general guidelines, there is no comprehensive regulatory code that aligns with international standards such as the AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) or IFSB (Islamic Financial Services Board) governance standards.27 This regulatory vacuum results in varied practices among institutions, weakening the credibility and consistency of Shari’ah compliance in the sector.28 The absence of binding national guidelines allows for institutional discretion, which may compromise Shari’ah integrity and market confidence. Limited Independence and Authority of Internal Shari’ah Committees Internal Shari’ah Committees (ISCs) in Nigerian IFIs are often structurally and functionally dependent on management. Many ISCs lack autonomy in decision-making and are not sufficiently empowered to enforce Shari’ah compliance or reject non-compliant proposals.29 Their authority is often advisory rather than executive, and their decisions may be overridden by management in the interest of profitability. Moreover, ISCs are usually appointed and funded by the same institutions they are meant to oversee, creating potential conflicts of interest.30 This undermines their role as independent guardians of Shari’ah principles. Fragmented Regulatory Oversight and Coordination The governance of Islamic finance in Nigeria is dispersed across multiple regulators CBN, SEC, NAICOM, NDIC without a unified Shari’ah supervisory body. This fragmented oversight structure causes regulatory inconsistencies and hinders the development of a coherent governance policy for Islamic financial products.31 Unlike Malaysia, which has a centralized Shari’ah Advisory Council under Bank Negara Malaysia, Nigeria lacks a supreme authority to resolve Shari’ah disputes or issue binding rulings across sectors.32 This fragmentation has led to inter-agency gaps and inconsistencies in product approval, compliance monitoring, and conflict resolution. Capacity and Qualification Gaps Among Shari’ah Scholars There is a significant shortage of qualified Shari’ah scholars with expertise in both Islamic jurisprudence (fiqh al-mu’amalat) and modern financial systems. Many scholars serving on Shari’ah boards lack practical knowledge of finance, accounting, or risk management, which affects the quality and relevance of their reviews.33 Furthermore, there is no mandatory certification process or national register of Shari’ah scholars in Nigeria, as found in more advanced jurisdictions.34 This limits the professionalization of the field and results in inconsistencies in fatwa issuance and product interpretation. Ethical, Operational, and Disclosure Challenges Shari’ah governance in Nigeria also faces ethical and operational issues, including lack of transparency in fatwa decisions, inadequate Shari’ah audits, and poor disclosure practices.35 Many IFIs do not publicly disclose the rationale behind key Shari’ah rulings or provide annual Shari’ah compliance reports.36 Additionally, there are operational weaknesses in how Shari’ah reviews are integrated into the overall risk and compliance architecture of institutions. The absence of regular external Shari’ah audits further weakens the system and limits accountability to both regulators and the investing public.37 5. Implications of Weak Shari’ah Governance Risks of Shari’ah Non-Compliance A weak Shari’ah governance framework exposes Islamic Financial Institutions (IFIs) to the critical risk of Shari’ah non-compliance. Non-compliance may render financial transactions religiously void or invalid, potentially resulting in financial losses, litigation, or forced restitution to customers.38 In jurisdictions where Islamic finance operates without a robust oversight mechanism, there is a greater tendency for misinterpretation or negligent application of fiqh al-mu’amalat (Islamic commercial jurisprudence).39 Such deviations not only undermine the theological legitimacy of products and services but also increase operational and reputational risks. Loss of Public Confidence and Reputational Risks Shari’ah compliance is central to the identity and public perception of Islamic financial institutions. When there are perceived or actual failures in upholding Islamic principles, public trust is eroded.40 In Nigeria, the lack of uniform Shari’ah rulings and the absence of transparent fatwa disclosure have led to skepticism among consumers and investors.41 This erosion of confidence may result in customer attrition, reluctance of institutional investors to engage, and loss of market competitiveness especially when contrasted with more mature Islamic finance jurisdictions with robust governance infrastructures. Legal Uncertainty and Contractual Disputes Inadequate Shari’ah governance leads to ambiguity in contract structuring and enforcement. Since Shari’ah principles govern the legality and validity of contracts in Islamic finance, discrepancies or inconsistencies in Shari’ah interpretation can result in legal uncertainty.42 For instance, a transaction deemed compliant by one internal Shari’ah board may be challenged in court or by regulators due to divergent interpretations.43 The absence of a centralized authority to resolve such discrepancies in Nigeria further exacerbates the risk of contractual disputes, which can deter both domestic and international investment. Impact on the Growth and Credibility of the Islamic Finance Market Ultimately, weak Shari’ah governance stifles the sustainable development of the Islamic finance industry. Institutions may become risk-averse, avoiding innovation in product development for fear of non-compliance or reputational damage.44 Moreover, Nigeria’s ambition to become a hub for Islamic finance in West Africa is undermined by the lack of globally benchmarked governance structures.45 Without harmonized standards, credible Shari’ah boards, and institutionalized oversight, Nigeria may struggle to attract foreign investment, integrate with global Islamic capital markets, or issue competitive sukuk (Islamic bonds) with broad investor appeal.46 6. Comparative Analysis: Global Best Practices in Shari’ah Governance Malaysia: Centralized Shari’ah Advisory Council and Regulatory Model Malaysia is widely regarded as a global benchmark in Islamic finance, primarily due to its centralized and well-structured Shari’ah governance framework. The Shari’ah Advisory Council (SAC) of Bank Negara Malaysia serves as the highest authority in Shari’ah matters relating to Islamic finance. Its decisions are binding on all Islamic financial institutions (IFIs), ensuring uniformity and legal certainty.47 The SAC operates under the Central Bank of Malaysia Act 2009, giving it statutory authority and enabling a harmonized interpretation of Shari’ah principles across the financial sector.48 Malaysia also mandates that each IFI establish its own Shari’ah Committee (SC), which must report to both the board and the regulator. This dual-tier system centralized at the national level and institutionalized within IFIs has significantly improved Shari’ah compliance and investor confidence.49 Bahrain: AAOIFI Standards and Central Bank Oversight Bahrain, home to the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), has adopted a regulatory framework that emphasizes standardization and global consistency. The Central Bank of Bahrain (CBB) requires IFIs to comply with AAOIFI's Shari’ah governance standards, including the appointment of qualified Shari’ah scholars and disclosure of fatwas.50 The CBB also conducts Shari’ah audits and has introduced measures such as mandatory rotation of Shari’ah board members to prevent conflicts of interest.51 This integration of international standards into national regulation has positioned Bahrain as a leader in promoting transparency and accountability in Islamic finance.52 Pakistan and Sudan: Integration of Shari’ah and Financial Supervision In Pakistan, the State Bank of Pakistan (SBP) has institutionalized the Shari’ah governance framework through the Shari’ah Governance Regulations 2015, which mandate the creation of Shari’ah boards, regular audits, and scholar certification.53 The SBP has also established a centralized Shari’ah Board that issues rulings and guidelines binding on all IFIs. Meanwhile, Sudan adopts a full-fledged Islamic banking system where all financial institutions operate under Shari’ah law. The Central Bank of Sudan plays a supervisory role and ensures all financial instruments comply with Islamic jurisprudence.54 Both countries provide useful models for integrating Shari’ah oversight into national financial regulation, though their implementation varies in rigor and institutional support. Lessons and Transferability to Nigeria From these comparative examples, several lessons emerge for Nigeria. First, the establishment of a centralized Shari’ah Supervisory Council would help unify interpretations and provide legal certainty. Second, aligning domestic practices with global standards like AAOIFI and IFSB would enhance credibility and facilitate cross-border transactions. Third, institutional capacity building, including mandatory certification and continuous training for Shari’ah scholars, would address the expertise gap.55 Nigeria’s plural legal environment and dual banking system offer a unique context, but with coordinated regulatory reforms and stakeholder engagement, the successful practices from these jurisdictions can be adapted to build a stronger Shari’ah governance framework. 7. Prospects for Strengthening Shari’ah Governance in Nigeria Enhancing Regulatory Frameworks and Harmonization To strengthen Shari’ah governance in Nigeria, there is a pressing need to enhance and harmonize regulatory frameworks. Currently, various regulators such as the Central Bank of Nigeria (CBN), the National Insurance Commission (NAICOM), and the Securities and Exchange Commission (SEC) operate independently with limited Shari’ah-focused coordination. The introduction of a unified Shari’ah governance code, aligned with international standards like those of AAOIFI and IFSB, will help eliminate ambiguities and inconsistencies.56 Such harmonization is necessary for promoting investor confidence and legal certainty in Islamic financial transactions.57 Establishing Centralized Shari’ah Supervisory Authority One of the most significant gaps in Nigeria's Islamic finance ecosystem is the absence of a centralized Shari’ah supervisory authority. Drawing lessons from Malaysia’s Shari’ah Advisory Council or Bahrain’s Central Bank model, the creation of a national-level Shari’ah Supervisory Council empowered by statute and hosted by CBN or a dedicated Islamic finance commission would offer authoritative interpretations of Shari’ah rulings and resolve conflicts among institutional committees.58 This will also prevent the duplication of fatwas and ensure uniform Shari’ah compliance across institutions.59 Promoting Professional Development and Certification for Shari’ah Scholars The capacity gap among Shari’ah scholars in Nigeria poses a long-term threat to governance integrity. Many scholars serving on Shari’ah boards lack formal training in contemporary finance, while others are not familiar with emerging Islamic financial products.60 Establishing professional certification programs possibly in collaboration with institutions like International Shari’ah Research Academy (ISRA), AAOIFI, and Islamic Finance Training Institutes (IFTIs) will ensure that Shari’ah board members are well-qualified.61 Moreover, periodic training and continuing education should be mandatory for all members of internal and external Shari’ah boards. Improving Transparency, Accountability, and Audit Mechanisms Transparency and accountability are essential to any governance framework. Nigerian IFIs need to institutionalize independent Shari’ah audits, publish Shari’ah compliance reports, and disclose fatwas and decisions issued by their Shari’ah Committees.62 Regular assessments by external reviewers preferably coordinated by the proposed centralized supervisory authority will enhance institutional integrity. Furthermore, the rotation and tenure limits of Shari’ah board members should be enforced to prevent over-familiarity and conflict of interest.63 Encouraging Stakeholder Engagement and Inter-Institutional Cooperation For Shari’ah governance to be sustainable and effective, it must include all relevant stakeholders, including regulators, scholars, financial experts, investors, and the general Muslim public. Platforms for inter-institutional dialogue such as national conferences, working groups, and joint training initiatives will facilitate knowledge sharing and consensus building.64 Public awareness campaigns about Shari’ah-compliant products and governance practices will also strengthen trust in the industry.65 Collaborative efforts between universities, regulatory bodies, and industry players can further enrich the Shari’ah governance landscape. 8. Policy Recommendations Drafting and Implementation of a Unified Shari’ah Governance Code The foremost recommendation is the drafting and implementation of a Unified Shari’ah Governance Code for all Islamic Financial Institutions (IFIs) operating in Nigeria. This code should be collaboratively developed by key regulators such as the Central Bank of Nigeria (CBN), National Insurance Commission (NAICOM), and the Securities and Exchange Commission (SEC), in consultation with Islamic finance experts and Shari’ah scholars. It should outline clear roles, responsibilities, and operational mandates of Shari’ah boards at institutional and national levels, promoting consistency and reducing interpretational ambiguities. The code should also embed dispute resolution mechanisms and disclosure requirements to improve accountability. Legal Reforms to Empower ACEs and Shari’ah Committees For the governance structure to be effective, legal reforms are required to institutionalize and empower Shari’ah Advisory Committees within the Approved Capital Entities (ACEs) and IFIs. These reforms should define the legal status, decision-making authority, and enforceability of Shari’ah board rulings, similar to the approach in Malaysia and Pakistan. Embedding Shari’ah boards' decisions into the legal framework of financial regulations will ensure uniformity and mitigate conflicts between conventional legal standards and Islamic jurisprudence. Capacity Building Programs by Regulatory and Academic Institutions Regulatory and academic institutions must invest in capacity building through professional training, certification, and research development. Institutions such as Bayero University Kano, International Institute of Islamic Banking and Finance (IIIBF), and Nigerian Institute of Advanced Legal Studies (NIALS) should partner with global bodies like ISRA and AAOIFI to offer diploma and executive programs in Shari’ah governance. Developing a pipeline of qualified professionals with expertise in both Islamic jurisprudence and modern finance is crucial to the sustainability of Islamic finance in Nigeria. Adoption of AAOIFI and IFSB Governance Standards Nigeria should adopt and domesticate internationally recognized governance standards issued by AAOIFI and IFSB, tailored to local legal and financial realities. These standards offer robust frameworks for institutional Shari’ah supervision, internal controls, audit processes, and disclosure practices. Adoption will also facilitate regional and global integration of Nigerian IFIs and improve investor confidence. Regulators should periodically review these standards and ensure mandatory compliance for licensed Islamic financial institutions. Monitoring and Evaluation Strategies for Compliance Effective governance requires continuous monitoring and evaluation. Regulators must establish units specifically responsible for auditing and assessing Shari’ah compliance performance in IFIs. These units should conduct annual Shari’ah audits, develop key performance indicators (KPIs) for compliance, and issue public ratings or reports on institutional adherence. The monitoring framework should also include feedback mechanisms that allow stakeholders including customers and employees to report unethical or non-compliant practices. 9. Conclusion Summary of Key Findings This study has critically examined the state of Shari’ah governance in Nigerian Islamic Financial Institutions (IFIs), highlighting multiple systemic and institutional shortcomings. The key issues identified include the absence of standardized Shari’ah governance guidelines, weak legal empowerment of Shari’ah committees, fragmented regulatory coordination, limited expertise among Shari’ah scholars, and operational inefficiencies. These deficiencies pose substantial risks, including Shari’ah non-compliance, reputational damage, legal ambiguity, and stunted growth of the Islamic finance sector in Nigeria. Comparative analysis with jurisdictions such as Malaysia, Bahrain, Pakistan, and Sudan reveals best practices that Nigeria can adopt to enhance its governance framework. Strategic Outlook for Shari’ah Governance Reform The future of Islamic finance in Nigeria hinges on the strategic reform of its Shari’ah governance architecture. A unified, transparent, and enforceable governance framework anchored by a centralized Shari’ah supervisory authority will be central to restoring public confidence and ensuring financial integrity. Building institutional capacity, aligning with international standards, and introducing technology-driven compliance monitoring systems will improve credibility and attract broader participation in non-interest finance. A proactive approach by regulatory bodies and stakeholders is essential to achieve these outcomes. Implications for Policy Makers, Regulators, and IFIs For policy makers, this study provides a blueprint for legislative action to legitimize and integrate Shari’ah governance into national financial regulations. Regulators are called upon to coordinate their oversight roles and ensure that IFIs comply with clearly defined governance standards. Islamic Financial Institutions, on their part, must strengthen internal Shari’ah control units, invest in scholar development, and enhance transparency in operations. The institutionalization of these practices will create a sustainable and competitive Islamic finance environment in Nigeria. Suggestions for Further Research Future research should explore empirical assessments of Shari’ah governance performance across Nigerian IFIs using quantitative and qualitative methods. There is also a need to investigate the socio-cultural and legal barriers to centralizing Shari’ah supervision in Nigeria’s pluralistic legal system. Additionally, comparative studies between conventional and Islamic financial regulatory models in Nigeria can offer deeper insights into convergence opportunities and governance synergies. References AAOIFI (2023). Shari’ah Board Accreditation Program. Manama: AAOIFI Publications. AAOIFI (2024). Governance Standard No. 1: Shari’ah Supervisory Board. Manama: AAOIFI Publications. Abdulkadir, M. A. (2024). Comparative Legal Frameworks for Shari’ah Governance in Africa: Lessons for Nigeria. International Journal of Islamic Law and Finance, 12(2), 58–74. Abdullah, R. & Ismail, M. (2024). Comparative Shari’ah Oversight Mechanisms: Malaysia vs. Nigeria. Journal of Islamic Financial Regulation, 8(1), 13–29. Abdullahi, I., & Yusuf, A. (2024). "Challenges of Shari’ah Governance in Nigerian Islamic Banks," International Journal of Islamic Economics and Finance Studies, 5(1), 45-62. Abdul-Rahman, T. (2023). Disclosure Deficiencies in Shari’ah Governance of African IFIs. Journal of African Islamic Financial Reporting, 2(1), 33–47. Abubakar, M. & Lawal, Y. (2023). The Gaps in Shari’ah Governance Frameworks in Nigeria: A Regulatory Perspective. Nigerian Journal of Non-Interest Finance, 4(2), 43–58. Ahmad, M. & Sulaiman, R. (2024). Shari’ah Compliance Risk and Its Management in Islamic Financial Institutions. Journal of Islamic Financial Stability, 6(1), 55–70. Ahmad, R. & Ibrahim, M. T. (2022). Assessment of Shari’ah Board Structures in Nigerian Islamic Banks. West African Journal of Islamic Finance, 3(2), 25–39. Ahmed, H., & Musa, A. (2023). Shari’ah Compliance Architecture in Sub-Saharan Africa: An Institutional Assessment. Journal of Islamic Banking and Development Studies, 9(1), 21–37. Al-Faruqi, S., & Adebayo, R. (2023). "Strengthening Islamic Finance Governance: Lessons for Nigeria from Global Practices," Global Journal of Islamic Finance, 11(3), 204-220. Aliyu, S., & Bello, H. (2023). Academic Contributions to Shari’ah Governance in Nigeria: A Case Study of Bayero University Kano. Journal of Islamic Finance and Ethics, 8(3), 97–112. Al-Mutairi, A., & Oke, B. (2022). The Role of Shari’ah Governance in Achieving Financial Stability in Dual Banking Systems. Journal of Islamic Finance and Management, 8(1), 45–60. Al-Qassimi, H. & Farooq, M. (2024). Shari’ah Auditing and Governance Practices in Bahrain: A Field-Based Review. International Journal of Islamic Economics, 5(2), 50–67. Bank Negara Malaysia (2023). Shari’ah Governance Framework for Islamic Financial Institutions. Kuala Lumpur: BNM Publications. Bello, A. S., & Abdul-Hamid, M. (2023). The Impact of Shari’ah Governance Failures on Financial Performance and Customer Retention in IFIs. International Journal of Islamic Financial Management, 10(3), 102–117. Bello, S. & Tanko, M. (2024). Enhancing Shari’ah Compliance Reporting in Nigerian IFIs. Journal of Financial Ethics and Islamic Law, 3(1), 33–48. Bello, U. & Gambo, A. (2023). Need for Central Shari’ah Supervisory Authority in Nigeria’s Islamic Finance Industry. Nigerian Journal of Islamic Banking Policy, 2(1), 17–29. Bello, U., & Musa, A. (2024). Compliance Lapses in West African IFIs: A Legal Review. African Journal of Islamic Law and Finance, 7(1), 42–60. CBN (2022). Framework for the Regulation and Supervision of Institutions Offering Non-Interest Financial Services in Nigeria. Abuja: Central Bank of Nigeria. CBN (2024). Strategic Roadmap for Islamic Finance Growth in Nigeria. Abuja: Central Bank of Nigeria, Policy Department. CBN, NDIC & SEC (2023). Joint Communiqué on Strengthening Regulatory Coordination for Islamic Finance. Abuja: Tripartite Regulatory Forum. Central Bank of Bahrain (2023). Rulebook: Volume 2 – Islamic Banks. Manama: CBB. Central Bank of Nigeria (2023). Draft Shari’ah Governance Framework for Non-Interest Financial Institutions. Abuja: CBN Publications. Central Bank of Nigeria (CBN) (2021). Revised Guidelines on Non-Interest Financial Institutions. Abuja: CBN Publications. Central Bank of Nigeria. (2021). Regulatory Framework for Non-Interest Financial Institutions. CBN Publications. Danjuma, M. & Ahmad, K. (2023). Innovation vs. Compliance: A Dilemma for Nigerian Islamic Banks. Journal of Islamic Financial Product Development, 2(1), 13–29. Dauda, A. & Yusuf, K. (2024). Translating Global Best Practices to the Nigerian Islamic Finance Industry. Nigerian Journal of Islamic Finance and Law, 3(2), 15–31. Dauda, K. & Ibrahim, H. (2024). Stakeholder Awareness in Nigeria’s Islamic Banking Sector: The Missing Link. West African Journal of Islamic Finance, 1(2), 10–25. Federal Ministry of Finance (2022). Nigeria's Sovereign Sukuk: Enhancing Infrastructure Through Ethical Financing. Abuja: Government Press. Gambo, A., & Aliyu, M. T. (2022). Capacity Challenges in Shari’ah Governance in Nigeria: Bridging the Knowledge Gap. West African Review of Islamic Studies, 4(3), 55–70. Hasan, Z. (2022). Agency Problems and the Role of Shari’ah Boards in Islamic Banks: A Theoretical Perspective. Journal of Islamic Economics, Banking and Finance, 18(2), 45–58. Hassan, M. K., & Lewis, M. K. (2023). Introduction to Islamic Finance: Principles and Practice. Wiley Finance. Ibrahim, R., & Sulaiman, N. (2022). Institutional Weaknesses in Shari’ah Committees of Nigerian Islamic Banks. International Review of Islamic Financial Institutions, 6(3), 91–107. IFSB (2023). Implementation of Shari’ah Governance Frameworks in Islamic Finance Jurisdictions: A Comparative Review. Kuala Lumpur: Islamic Financial Services Board. IFSB (2024). Guiding Principles of Shari’ah Governance Systems for Institutions Offering Islamic Financial Services. Kuala Lumpur: Islamic Financial Services Board. Ismail, H., & Tijjani, A. (2024). Sukuk Market Integration and Shari’ah Harmonization in Sub-Saharan Africa. African Review of Islamic Capital Markets, 1(1), 25–43. ISRA (2023). Collaborative Shari’ah Governance: Integrating Academia, Industry, and Regulators. Kuala Lumpur: ISRA Insights Series. Jaiz Bank Plc. (2023). Annual Report & Financial Statements 2022. Abuja: Jaiz Bank Plc. Kamal, M. Y. & Othman, R. (2024). Legal Enforceability of SAC Rulings in Malaysia: Implications for Financial Regulation. Journal of Islamic Legal Studies, 6(1), 29–45. Kamali, M. H. (2021). Policy Harmonization in Islamic Finance: A Comparative Study. Kuala Lumpur: International Institute of Advanced Islamic Studies (IAIS). Khalid, R., & Olanrewaju, S. (2024). Operationalizing Shari’ah Audit: The Missing Link in Nigeria’s Islamic Banking. Journal of Islamic Compliance and Assurance, 9(1), 76–92. Khan, F., & Raji, A. (2022). Institutional Pressures and Shari’ah Governance Practices in Emerging Economies: Evidence from Nigeria. African Journal of Islamic Finance and Economics, 4(2), 67–84. Muhammad, H. & Ahmed, S. (2024). Capacity Building for Shari’ah Governance in Emerging Islamic Markets. Islamic Banker’s Review, 12(2), 14–28. Musa, A. A., & Lawal, Y. (2023). Evolution and Institutionalization of Islamic Finance in Nigeria: Progress and Prospects. Journal of African Islamic Banking, 5(1), 31–45. Musa, I. & El-Tahir, S. (2024). Islamic Finance under a Fully Shari’ah-Compliant System: The Case of Sudan. African Review of Islamic Banking, 4(1), 40–58. Musa, U. H., & Ahmed, M. K. (2023). An Empirical Review of Shari’ah Governance Challenges in Nigeria’s Non-Interest Banking Sector. International Review of Islamic Finance, 15(2), 66–82. Naheem, M. (2024). Governance Dynamics in Islamic Finance: Preventing Conflict of Interest in Shari’ah Boards. Journal of Islamic Corporate Governance, 4(2), 17–30. NDIC (2023). Annual Report on Deposit Insurance for Non-Interest Banks. Abuja: Nigeria Deposit Insurance Corporation. Obid, S. N., & Noh, M. (2021). Stakeholder Perspective in Shari’ah Governance: A Malaysian Case Study. Global Journal of Islamic Governance and Ethics, 6(1), 11–29. Salisu, A. & Bello, U. (2024). Policy Imperatives for Centralized Shari’ah Oversight in Nigeria. Nigerian Journal of Islamic Economic Studies, 2(3), 22–39. State Bank of Pakistan (2023). Shari’ah Governance Framework. Islamabad: SBP. Sule, H. & Hassan, M. A. (2024). Toward a Certification Framework for Shari’ah Scholars in Nigeria. International Journal of Islamic Legal Reform, 3(2), 48–63. Usman, M., & Bello, S. (2022). "Growth of Islamic Banking in Nigeria: Opportunities and Challenges," Journal of Islamic Banking and Finance, 39(2), 117-132. Yusuf, A. & Isa, M. (2024). Legal Harmonization in Shari’ah Governance: A Case for Nigeria. International Review of Islamic Finance, 5(1), 60–75. Yusuf, A. (2024). Transparency and Disclosure in Shari’ah Governance: The Nigerian Experience. African Journal of Ethical Finance, 6(1), 44–61. Yusuf, A. M. (2023). Corporate Governance and Shari’ah Oversight in Non-Interest Banks: Revisiting the Nigerian Model. African Journal of Ethics and Finance, 7(1), 22–39.