A Shariah-compliant Sacco that promises to cushion pastoralists from incurring losses during droughts has opened a second branch in Wajir town. Crescent Takaful Sacco (CTS), the first Shariah-compliant Sacco in Kenya, seeks to engage and provide financial inclusion to the poor in northern Kenya. The Wajir branch is the first outside Nairobi. CTS has various products tailor-made for the arid and semi-arid region such as the Mifugo Kash-Kash product that links pastoral traders to potential markets. According to the Sacco’s Chairman Hassan Bashir, livestock traders are eligible for up to 70% financing through the product. The product is mainly delivered using the Islamic contracts of Mudharaba and Musharaka. In both contracts, the profit share is pre-agreed upfront and a distinct profit margin is charged on each delivered transaction.
Despite the efforts of the #Kenyan regulators, some toxic products have been allowed into the market under the banner of Islamic finance. The lack of clarity among regulators has allowed unscrupulous managers to mask certain offerings as Islamic, which has tainted the sub-sector’s reputation in recent months. Chase Bank was placed under receivership in April after special purpose investment vehicles it had classified as Islamic products were contested. Juma Makomba, the Sharia compliance manager at Takaful Insurance of Africa, said Chase Bank was not brought down by Islamic banking products because the facility would have qualified as a Qard-Hassan. He added that Qard-Hassan is given to somebody who is in distress, but the product they were calling a Qard-Hassan was in fact Musharakah.
In #Kenya the Gulf African Bank has ambitious expansion plans for the local market. The bank, which is so far only represented in five counties, plans to open ten new branches between 2016 and 2017. Follwoing Sharia rules, the bank does not finance casinos, breweries and anything that is hazardous to the human body. Gulf African Bank is stable and prepared to increase core capital which now stands at Sh3.8 billion. At the end of the year the bank's capital will be above Sh4 billion, while by 2017 above Sh5 billion.
Kenya's regulator has introduced new takaful rules which will allow the entry of conventional players into the sector. The rules will come into effect in June with firms required to adhere to the requirements by December, according to a document from Kenya's Insurance Regulatory Authority. This would see Kenya join the countries such as Pakistan and Indonesia in allowing takaful windows. Kenya's first full-fledged takaful firm was launched in 2011, Takaful Insurance of Africa. Islamic lender First Community Bank also operates a takaful scheme while Kenya Reinsurance Corp has developed a sharia-compliant reinsurance product of its own.
Kenya's regulator has introduced new takaful rules which will allow the entry of conventional players into the sector. The rules will come into effect in June with firms required to adhere to the requirements by December, according to a document from Kenya's Insurance Regulatory Authority. This would see Kenya allowing takaful windows, which enable firms to offer sharia-compliant and conventional products side by side. The rules require separate financial reporting requirements for takaful windows from their parent firm, and their operating model must be approved by a board of religious scholars. Operators must also maintain separate takaful funds for their general and life businesses.
Dubai Islamic Bank (DIB) is set open operations in Kenya, in what could be the start for Gulf-based lenders scouting for growth outside their home markets. The Emirate's largest Sharia-compliant lender has started head-hunting top managers for its Nairobi unit. DIB Kenya said it is obtaining a banking licence from the Central Bank of Kenya (CBK). DIB Kenya Ltd has been issued with an approval-in principle- to operate pending completion of the licensing process. The lender is seeking qualified persons in multi-nationals and local banks in Kenya to fill some 36 top and middle level positions within the bank.
Leaders of global and regional institutions pledge political support and major new financial assistance for countries in the region, totaling more than $8 billion over the coming years. UN Secretary-General Ban Ki-moon, the World Bank Group (WBG) President, Jim Yong Kim, as well as the President of the Islamic Development Bank Group and high level representatives of the African Union Commission, the European Union, the African Development Bank, and Intergovernmental Agency for Development (IGAD) are combining forces to promote stability and development in the Horn of Africa. The initiative covers the eight countries in the Horn of Africa -- Djibouti, Eritrea, Ethiopia, Kenya, Somalia, South Sudan, Sudan, and Uganda.
Kenya Reinsurance Corporation ( Kenya Re) is one of several local firms to venture into the Islamic re-insurance business with establishment of a Sh50 million Re-Takaful (or Sharia compliant reinsurance) window. Managing Director Jadiah Mwarania said demand for Shari’ah-compliant products has been growing and Kenya Re is seeking to ensure it retains existing business and expand into new markets. Kenya Re also launched a newly appointed board that would guide, monitor and supervise the new venture to ensure compliance with Sharia rules and principles. Mwarania expressed confidence that rekakaful would enable Kenya Re increase market share and attain financial growth.