Kenya is eying the oil-rich Middle East countries to raise cash for infrastructure development, National Treasury CS Henry Rotich said yesterday.
He said the ministry is in the process of developing an institutional and regulatory framework, that will help growth of Sharia compliant finance in Kenya.
The government is also seeking to become a member of the Islamic Development Bank, “in order to leverage on the opportunities enjoyed by the member states”, Rotich said.
The move will see Kenya tap into the global Sharia compliant assets currently pegged above $2 trillion (Sh203.39 trillion), and the fast growing Sukuk (Islamic bonds)market, to finance airports, power plants, dams and highways, according to the CS.
This is likely to be a game changer in the country’s infrastructure financing models currently heavily tilted towards Asia, mainly China.
“The increasing attention on Islamic finance is testament to the emerging realization of the sustainability and attractiveness of Islamic finance, as an alternative financing model in the post global financial crisis world,” Rotich said.
The government is banking on the financial sector to stimulate increase in investment and savings from both domestic and international resources, with a 10 per cent annual average economic growth target.
Treasury is currently working on the establishment of the Nairobi International Financial Centre, to position Kenya as a regional financial hub and an international financial centre.
The government is also developing a Capital Market Master plan to bolster resource mobilisation to finance its vision 2030 objectives.
“These flagship projects will however only succeed if we are able to leverage the opportunities available to us from Islamic finance,” Rotich said.
Among major breakthroughs will be the issuance of the Sukuk bond in Kenya to fund infrastructure projects.
Last week, Treasury presented a medium term debt strategy targeting to appropriate the mix of external and domestic borrowing.
Kenya currently relies on conventional financing which is associated with exorbitant interests and strict conditions.
A survey by the Kenya Bankers Association presented to Attorney General Githu Muigai yesterday, indicate Kenya could deepen its financial uptake and infrastructure funding by tapping into Islamic financing.
“Development of Islamic financial sector in Kenya adds to the diversity of financial services in the industry and its holistic growth,” the AG reckoned.
The two spoke during the East Africa Islamic finance summit in Nairobi.