Regulating Islamic P2P financing in Nigeria: a case for a compliance framework

This study looks into Nigeria's need for a robust compliance structure to regulate Islamic peer-to-peer (P2P) financing. Building on the fundamentals of Islamic finance and taking cues from global best practices in P2P financing regulations, this study suggests a thorough compliance framework customized for the Nigerian environment. A robust framework guarantees the adherence to Shari’ah, safeguard investors, and advances financial stability. This study examines the regulatory gaps in the existing compliance environment, analyzes the difficulties in enforcing compliance, and foresees probable opposition from industry stakeholders. The study adopts a qualitative research methodology approach. It relies on primary data sourced from interviews, and official publications, as well as secondary data from articles, websites, and online resources. This study finds that although the Islamic finance industry in Nigeria has overtime developed, there is nevertheless the need for an end – to – end Shari’ah compliance framework (from initiation to execution and post – execution) for the effective regulation of Islamic P2P financing. Additionally, a suggested model for a compliance framework is presented in this study. It evaluates the framework's effect on the sector and offers insightful information about its effectiveness. This study fills a significant vacuum in literature while also providing policymakers, regulators, and business stakeholders with useful advice for navigating the rapidly changing environment of Islamic P2P financing in Nigeria. This study concludes by emphasizing on the significance of a compliance framework in promoting the expansion of P2P financing in Nigeria that ensures adherence to Shari’ah principles and the protection of the interests of all parties. It adds to the continuing discussion on regulatory innovation in Islamic finance and lays the groundwork for further study and the creation of new policies in this emerging area.