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.

Operations Risk Manager

Reporting to the Head of Risk and Compliance, the successful candidate will identify measure and analyze the various enterprise-wide operations risks that the Bank faces and formulate strategies on how to mitigate and minimize the risk exposures.

Bank unveils Sharia product

A further Sharia-compliant product for corporate customers was recently launched by Barclays bank. It is called La Riba Asset Finance and serves customers to buy assets locally as well as internationally. The product is meant for Muslim clients.

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Barclays Kenya to Offer Shariah-Compliant Corporate Finance

Barclays Bank of Kenya Ltd. announced the beginning of Shariah-compliant asset-finance product offer for corporates companies. This way it attempts to meet the growing demand of those companies. Barclays set aside $30 million for the so-called Corporate La Riba Asset Finance product. The latter includes fixed pricing and repayment periods of up to five years.

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IFC to invest $5 million in Gulf African Bank

International Finance Corporation (IFC) proposed an equity investment in Gulf African Bank (GAB) worth $5 million. The investment is expected to improve the bank's strength and provide additional capacity for growth. under IFC’s Global Trade Finance Program (GTFP), an additional $3 million trade line will be made available by IFC to the bank.

Diplomat to start Horn of Africa’s first stock market

Somali Ambassador Idd Mohamed wishes to establish a stock exchange in neighbouring Kenya in order to allow other east Africans access to companies in Kenya. This should encourage priavate capital to develop across the continent.

Kenya Re appoints Sharia board

In preparation to assume risks of firms offering Islamic Insurance cover known as ReTakaful, Kenya Reinsurance Corporation (Kenya Re) has decided upon a Sharia board. This way, the establishment of a dedicated ReTakaful window has been brought closer within the corporation. The board of Muslim scholars and people conversant with the Quran will contribute to the preservation of Kenya Re's responsiveness to requirements of its clients and to its development of solutions that satisfy the takaful industry demands for Sharia-Compliant reinsurance services.

Islamic banking in Africa

KFH Research made a report about the future of Islamic finance in Africa that shows that there are various promising opportunities for the growth and development of Islamic banking in Africa; especially North African countries, in addition to Kenya, Nigeria, Senegal and South Africa.
In addition, the report noted that Africa hosts 38 Islamic finance institutions, and stressed that most African countries have amended their legislations to allow Islamic institutions to operate.

Kenya freezes new Takaful licenses

Kenya has blocked the licensing of new Takaful companies until a suitable law to manage them is completed. This gives Kenya’s existing Takaful firms the opportunity to grow unrestrained by new competition. But the regulator’s strategy risks losing its position as the leading IF hub in East Africa to neighbors Tanzania and Uganda, who have put no such restrictions on new local and foreign firms entering their markets.
At present Kenya’s insurance law does not admit Takaful as a standalone product, although the law empowers the IRA to launch ad hoc regulations authorizing individual operators on a case-by-case basis to sell Takaful products. The insurance law also does not permit companies to invest in offshore assets, locking out Kenyan Takaful entities from established capital markets in the Middle East and Asia.

Africa looks to Islamic finance

Africa is mooving its economic attention away from the west to the Middle East and Asia as a primary source of capital raising. This shift in alignment partially explains the expected launch of a number of Sukuk across the continent in 2012.
Countries that have announced sovereign Sukuk to raise capital for their budgets are: South Africa, Senegal, Nigeria and Kenya. This move is especially welcomed by sovereign wealth and Islamic finance institutions - especially in the GCC.

CIC sees business sense in Takaful

Takaful Insurance for Africa’s largest shareholder, Cooperative Insurance Company (CIC) is admiring its decision to invest in Kenya’s first Takaful company.
CIC’s GM, Kenneth Kimani, noted TIA’s strong progress and the fact that Takaful in Kenya offers better opportunities for growth than conventional insurance. CIC owns 20% of TIA which saw more than $1m of premiums raised in the first four months of operations.

Africa looks to Islamic finance

Africa has begun to move its economic attention away from the west to the Middle East and Asia as a primary source of capital raising. This shift in alignment partially explains the forthcoming launch of a number of Sukuk across the continent in 2012.
South Africa, Senegal, Nigeria and Kenya have all divulged sovereign Sukuk to raise capital for their budgets, a marked move away from aid and loans from the economies of Europe and the US and a move broadly welcomed by sovereign wealth and Islamic finance institutions – especially in the GCC.
Senegal, for exmaple will issue a $200m Sukuk, initially planned for this year but now most likely for the begin of 2012. Finance minister Abdoulaye Diop stated that proceeds from the Sukuk will be used for budgetary support.

Confused in Kenya

It seems that although the planned introduction of Sukuk in Kenya is foreseen to expand the opportunities available in the capital market, fund managers stated that its impact will not be significant unless the Sukuk represent tangible assets to allow trading, or are deliberately structured to have a short maturity if they represent receivables of cash.
In Kenya, fund managers are used to trading bonds with commercial banks and will be searching for similar opportunities from Sukuk issues.

Islamic accounting standards in Kenya

The Institute of Certified Public Accountants of Kenya (ICPAK), wishes Islamic finance institutions to take responsibility for upgrading the skills level among their staff to guarantee that accounting standards in Shari'ah compliant companies are up to international financial reporting standards.
Kenya has experienced real growth in Islamic finance and questions are being asked on the availability of talent that comprehends Shari'ah compliant financial processes.
Kenya's Islamic finance industry consists of two banks and an insurance company plus several Shari'ah compliant windows of about a dozen conventional banks.

Kenya’s CMA in Sukuk call

The Capital Markets Authority of Kenya has just animated the blue touch paper for Sukuk issuance by recommending that all future bond issues have to posess a Shari’ah compliant component to them. This directs that Islamic finance institutions will have an ever-expanding pool of liquidity from which to expand. The ruling will also grant retail customers to buy into the Shari’ah compliant Sukuk market.
The recommendations came after a study by a group chosen by the CMA.
Islamic finance players stated that they are analyzing the recommendations before they issue their views.

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