Analytical Study of the Islamic Law of Suretyship (Kafala) and Its Application to Microfinance Guarantee Mechanisms in Nigeria

Islamic Kafala (suretyship) provides a Sharia-compliant mechanism through which a guarantor assumes the debt obligations of a principal debtor without receiving interest, making it potentially applicable to microfinance loan guarantee schemes, agricultural cooperative finance, and small business lending programmes in Nigeria that currently rely on conventional guarantee structures. This study analytically examines the doctrine of Islamic Kafala and its application to microfinance guarantee mechanisms in Nigeria. A comparative doctrinal and financial analysis methodology is applied, reviewing classical Islamic Kafala jurisprudence across Hanafi, Maliki, and Shafi'i schools, the AAOIFI Kafala Standard, and the guarantee structures of three Nigerian Islamic microfinance institutions and the CBN-supported Agricultural Credit Guarantee Scheme, evaluating their Sharia compliance. Structured interviews with fifteen Islamic microfinance practitioners and ten Sharia scholars supplement the documentary analysis. The study examines the conditions for valid Kafala, the scope of the guarantor's liability, the treatment of guarantee fees, and the compatibility of group guarantee mechanisms (used in Grameen-style Islamic microfinance) with Kafala doctrine. Available Islamic microfinance guarantee literature from Nigeria identifies interest-based elements in conventional guarantee fees as the primary Sharia compliance concern in existing schemes. The Maliki Kafala doctrine and AAOIFI Standards provide the analytical reference. Findings are expected to reveal significant Sharia adaptation requirements for existing guarantee schemes. Recommendations address Sharia-compliant guarantee product design, CBN guidance on Islamic guarantee instruments, and model Kafala documentation for microfinance use. Keywords: Kafala, suretyship, Islamic microfinance, guarantee mechanisms, Nigeria.