Legitimacy, Identity, and Entrepreneurship in Nigeria’s Islamic Finance Sector

This study empirically examines how entrepreneurs in Nigeria's emerging Islamic finance sector manage legitimacy and identity challenges as they develop sharia-compliant financial products and services in a national financial market that remains predominantly interest-based conventional banking. Nigeria's Muslim majority population, particularly concentrated in North West and North East zones, represents a large potential market for sharia-compliant financial services, and a growing number of entrepreneurs have entered the Islamic finance space through microfinance, insurance, and capital market products. The challenges of legitimacy with both religious authorities and secular financial regulators, as well as market identity challenges in positioning sharia products to skeptical or unfamiliar consumers, make this an analytically productive context for studying entrepreneurial legitimacy management. The study employs a qualitative grounded theory methodology, conducting in-depth interviews with 18 founders and senior executives of Islamic finance enterprises in Kano, Abuja, and Lagos. Theoretical sampling continues until theoretical saturation is reached. Constant comparative analysis was applied. Findings reveal a complex legitimacy management process in which entrepreneurs simultaneously seek endorsement from Islamic scholars, compliance certification from the CBN, and consumer trust signals that differentiate their products from conventional banking. Founders describe navigating a dual legitimacy challenge not faced by conventional finance startups. A grounded theory of Islamic finance entrepreneurial identity management is proposed as the study's primary theoretical contribution. Keywords: Islamic finance, entrepreneurial legitimacy, identity, Nigeria, sharia-compliant enterprise.