- Over the last decade, Shariah-compliant products have continued to penetrate the market.
- About 30 per cent of the Kenyan population is Muslim, but the majority are not users of Shariah-compliant products.
Image: HANDOUT
Islamic banking was introduced into Kenya about 12 years ago to offer Shariah-compliant products to the conservative Muslim community.
However, over the last decade, Shariah-compliant products have continued to penetrate the market.
More financial institutions, insurance, and telecommunication companies are introducing products that are Shariah compliant.
In 2017, DIB Bank Kenya, a subsidiary of Dubai Islamic Bank, opened its doors in Kenya with the goal to establish and promote a sustainable and ethical financing model that conforms to Islamic Law.
The bank has since become a role model in the Shariah-compliant financial services space.
This has placed Islamic finance as an innovative and viable alternative, focusing on sustainable investments necessary to drive economic growth and diversity.
Due to an increase in demand for Shariah-compliant banking solutions and services, DIB Bank Kenya embarked on an expansionary agenda.
“We recently opened our sixth branch in Nairobi, in the heart of the Kenyan financial hub, to meet the growing demand for Shariah-compliant products,” the bank said in a statement.
“We are confident the branch will significantly facilitate ease of access to our products and services by the bank's customers within the Nairobi Central Business District.”
Takaful Insurance of Africa, a pioneer in offering insurance services that are Shariah-compliant, opened its doors in Kenya in 2008.
Hassan Anil, the Head of Business at Takaful, said their concept is based on the principles of togetherness, cooperation and mutual solidarity for all.
“We operate on an ethical and moral foundation that intends to improve societal welfare and avoids prohibited activities involving exploitative interest, gambling, and excessive uncertainty,” he said.
Anil said during the onset years, Kenyans had not fully accepted the Shariah-compliant products.
“The product was being associated with a certain community and religion, but over the years, we have started to see more and more people accepting this product,” he said.
He said about 50 per cent of all the clients in their car insurance policy are people from other faiths, not necessarily the Muslim.
Anil said despite an increase in companies that offer Shariah-compliant products, they are yet to fully capture the whole market.
“About 30 per cent of the Kenyan population is Muslim, but the majority are not users of Shariah-compliant products,” he said.
In March this year, Safaricom and Gulf African Bank partnered to offer Halal Pesa, a Shari’ah-compliant mobile financing solution.
Gulf Bank, a premier Shari’ah-compliant bank, Gulf African Bank, said the new product will help its customers access financing through the service.
They will receive the amount requested in full with a repayment period of 30 days at a 5 per cent commodity Murabaha margin.
“Our aim is to provide instantaneous access to interest-free credit through Halal Pesa. We are glad that we could partner with a like-minded partner like Safaricom limited to advance this vision,” GAB managing director Abdalla Abdulkhalik said.
Abdulkhalik was speaking during the launch of the product in Mombasa's Fort Jesus
Halal Pesa empowers M-Pesa customers who had previously been locked out of access to financing due to barriers such as a lack of Shariah-modeled mobile facilities.
“We remain keen on partnerships that enable us to provide a wide variety of financial solutions that meet the diversified needs of our customers further broadening financial inclusion to ensure that we leave no one behind,” Peter Ndegwa, Safaricom CEO said.
(Edited by Tabnacha O)