Kenya

Kenya's market overhaul eyes Islamic finance framework

Kenya's financial regulator has proposed a separate regulatory framework for Islamic financial institutions as part of a broad ten-year strategy designed to boost capital markets. A draft of the strategy was circulated early this year and the plan is now in its final stages of preparation. It aims to promote more sophisticated financial services in Kenya. In the short term, the CMA plans to create a regulatory framework of its own for Islamic capital markets, focusing on corporate governance, information disclosure, a policyholder compensation fund and responsible pricing. In the long term, however, the CMA would engage the central bank and national Treasury to develop a separate policy, legislative and regulatory framework for Islamic finance.

Employer of the week Gulf African Bank

Our employer of the week has several vacancies to offer job seekers out there. Gulf African Bank which opened its doors in the country in 2008 is looking for customer service officers, product development, shariah compliance officers and tellers. Swaleh Sharif who is the human resource director says the deadline to submit your applications is in two months’ time.

Kenyans warming up to Shariah compliant banking

Last November, Kenyan president Uhuru Kenyatta attended the third Arab-Africa Summit in Kuwait. The visit and subsequent bilateral discussions were largely geared at establishing and strengthening joint financing mechanisms for capital intensive infrastructural projects through strong economic ties. During the visit, the Treasury realised Kenya was a member of the Islamic Development Bank which could help the country to tap more funds and become a highly industrializing, middle-income economy in the next 16 years. While over short term the country is focused on tapping into conventional financing streams from the dominantly Islamic Arab countries, it is angling herself to become the East and Central African hub for Islamic finance and banking over medium to long term period.

Islamic re-insurance to be unveiled this year

The first ever Islamic re-insurance is expected to be launched this year as the Kenya Reinsurance Corporation ventures into Sharia-compliant business. The Capital Markets Authority says in its new 10-year master plan that Kenya Re has the potential to provide a regional platform for this product since it has presence in West Africa and Middle East markets. The master plan has also proposed for the creation of a regulatory framework for Islamic capital markets focusing on corporate governance, disclosures, a policyholder compensation fund and responsible pricing. The CMA has in addition proposed the development of a separate policy, legislative and regulatory framework for Islamic products and services covering Islamic financial institutions, financial regulators, Islamic groups and the Ministry of Finance. This policy will run parallel to the conventional Act.

Gulf Bank pegs listing plan on IFC exit

Gulf African Bank has tied its public listing plans to the exit of International Finance Corporation (IFC) from its shareholders’ roll. IFC bought a 15 per cent stake in the bank for $5 million (Sh430 million) last year, which valued it at about $33.33 million (Sh2.86 billion) at the time. Chief executive of Gulf Bank Abdalla Abdulkhalik said IFC plans to exit through a public share sale. The IPO is also expected to raise additional capital for the lender. However, no timeframe has been set. Going by the IFC’s investment horizon the public could get a chance to buy into the lender by 2017. IFC’s policy is to invest in firms for between five and seven years. Gulf Bank's total assets stood at Sh13.56 billion as at the end of 2012, up from Sh5 billion as at the end of 2008.

IFC Acquires 15% Stake In Gulf African Bank For $5m

The International Finance Corporation (IFC) – the investment arm of the World Bank – has acquired 15 percent shareholding in Gulf African Bank, Kenya's Islamic bank, for $5 million (Sh425 million). In addition, a further $3 million (Sh255 million) trade guarantee has been opened for Gulf African Bank under IFC’s global trade finance programme. Gulf African Bank said it would use IFC’s financing to boost finance for retail and corporate customers and develop programmes for women entrepreneurs while also extending services to SMEs. In addition to the IFC partnership, the bank is undertaking a rights issue to increase its capital base by an additional Sh850 million.

Standard Chartered to launch Islamic banking in Kenya, Indonesia

Standard Chartered Plc will start offering Islamic banking in Kenya as a springboard into the rest of Africa, Wasim Saifi, its global head of Islamic consumer banking said. Moreover, it may expand services in Indonesia. He said the bank would offer the services through its Islamic banking brand, Standard Chartered Saadiq, targeting the country’s official Muslim population of 4 million people, as well as non-Muslims. The new products will first be launched in Kenya, then in other countries in east Africa and west Africa, as well as further afield. Especially Indonesia is interesting to the bank because Islamic finance is set to triple or quadruple in the next five-ten years in the country. Standard Chartered currently offers Islamic banking in Indonesia through associate Bank Permata

MICROCAPITAL BRIEF: Kenya-based Gulf African Bank, African Guarantee Fund Partner to Lend $1.2m to Small, Medium-Sized Businesses

The African Guarantee Fund (AGF), reportedly has agreed to guarantee an unspecified portion of KES 100 million (USD 1.2 million) to be loaned by Gulf African Bank (GAB) to SMEs in Kenya. After the signing of the agreement, GAB Managing Director Asad Ahmed reportedly expressed his belief that the deal will help to increase the bank’s financing and risk management capabilities. AGF was established in Kenya in June 2012 with initial capital sufficient to issue partial guarantees of loans totaling USD 50 million. AGF has branches in nine African countries as of March 2013. As of March 2011, GAB had total assets of KES 9.6 billion (USD 112.3 million) and customer deposits of KES 8.2 billion (USD 96 million).

Takaful: TIA to expand operations in East Africa

Kenya's only Shariah-compliant insurer Takaful Insurance of Africa Ltd (TIA) plans to expand its operations into five East African nations, according to its Chief Executive Officer Hassan Bashir. Under TIA’s five-year plan it will expand into Ethiopia, Tanzania, Uganda, Somalia and the autonomously governed enclave of Somaliland, where it was granted a license this year. CIC Insurance Group (CIC) is one of the largest investors in TIA with about 22 percent, while four investment companies also have stakes. In Kenya, TIA has four outlets and 80 agents in Nairobi and Mombasa. The company plans to add at least two more outlets this year and double the number of agents, Bashir said.

Kenya's Takaful Insurance plans East Africa expansion

Kenya-based Takaful Insurance of Africa Ltd. plans to expand into five East African countries, including Tanzania, Somalia, Uganda, Ethiopia and the self-declared sovereign state Somaliland, as part of the insurer's plans for the 2013-2017 period, CEO Hassan Bashir said.

Kenya’s Sole Shariah-Compliant Insurer to Expand in Region

Takaful Insurance of Africa Ltd. plans to expand its operations into Ethiopia, Tanzania, Uganda, Somalia and the autonomously governed enclave of Somaliland under its five-year plan 2013-2017. In Kenya, Takaful Insurance has four outlets and 80 agents in Nairobi and Mombasa. The company plans to add at least two more outlets this year and double the number of agents, according to its CEO Hassan Bashir. Takaful’s premiums totaled 430 million shillings last year.

Takaful seeks to diversify product range

Takaful Insurance of Africa is banking on product diversification and opening of more shops to establish itself better in the region. The insurer has already acquired an operating licence from the Retirement Benefits Authority to start a Shariah-compliant pension scheme while the Insurance Regulatory Authority (IRA) allowed it to transact long-term insurance business or family Takaful known in conventional insurance as life insurance. Moreover, TIA is planning its expansion, especially in regions of Kenya with a high Muslim population. The company posted profits of Sh26 million for the year 2012.

Islamic banks break even and post growth in profit

The two Islamic banks in Kenya posted growth in their profits last year as the faith-based banking concept becomes entrenched in the country's financial sector. Gulf African Bank and First Community Bank were able to break even in a fairly short time — Gulf African in two years and First Community in three years. Last year, Gulf African registered 154 per cent after-tax profit growth to Sh242 million. First Community Bank, on its part, recorded 239 per cent growth in profit-after-tax to Sh241.3 million last year. According to the Central Bank, by December 31, 2010, the two Islamic finance banks collectively commanded 0.9 per cent of the banking sector net loans and advances of $115 million (Sh9.7 billion) and deposits of $171 million (14.5 billion).

Sharia insurance policyholders paid dividend

In line with the Sharia law on insurance of sharing profits and losses, Takaful Insurance of Africa company has shared Sh15.6 million surplus from its premium pool with clients. The company on Saturday issued 2,000 clients who contributed to the company's premium pool over the last one year with cheques for various amounts depending with the money they paid for various covers. The three highest paid customers took home Sh240,000, Sh150,000 and Sh100,000 respectively. According to its five-year plan, the company plans to spread its wings all over the country and to establish networks in Nyanza, Western and also Isiolo county.

IFC Makes First Islamic Finance Investment in Sub-Saharan Africa

IFC has announced the investment of $5 million equity in Gulf African Bank, one of Kenya’s two Islamic Banks. The bank will use IFC’s financing to increase finance for retail and corporate customers, develop programs for women entrepreneurs and extend more services to small and medium businesses. Jamal Al Hazeem, Chairman of Gulf African Bank, welcomed IFC’s decision to take up a 15% shareholding stake in Gulf African Bank. In addition to the equity investment, a further $3 million trade line will be made available to Gulf African Bank under IFC’s Global Trade Finance Program.

Kenya Re launches Sharia compliant product

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.

Kenya Re sets sights on Islamic finance

The Kenya Reinsurance Corporation is planning to venture in sharia-compliant business and confirmed that it will start ReTakaful insurance in the country and the areas where it already has a presence in West Africa and the Middle East markets. According to the firm’s managing director, Mr Jadiah Mwarania, the development is part of Kenya Re’s 2013-2017 core strategic areas that touche on market expansion and development of products. The firm elected a sharia-based supervisory board last year to advise the firm on acceptable aspects of the ReTakaful.

Genghis Capital to Launch Shariah Unit Trust

Genghis Capital, the investment arm of Chase Bank is planning to launch a Shariah-compliant unit trust called the Iman Fund in Kenya next month. The Fund is aimed at Muslim investors with an entry level for investments of minimum 500 Kenyan Shillings ($5.78).

Don’t grab land, invest in the locals

Multinational corporations and nations buy up land in foreign countries, most of them intending to export the production. Oxfam recently published a report about this phenomenon, called land-grabbing and its problems for the local societies. However, the Oxfam’s study also gives recommendations for a possible solution to the dilemma.

Genghis to launch Islamic unit trust

Genghis Capital plans to launch Shariah-compliant unit trust in February aiming to raise stakes in the nascent market mainly tailored for Muslim investors. The unit trust is named Iman Fund and is part of a money markets, equity, diversified and bond unit trusts which the company intend to launch in the very near future. According to the Genghis Capital unit trust consultant, there are many Kenyan investors willing to invest in ventures considered socially responsible. However, so far their options have been limited because religious beliefs forbid most of what is on offer.

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