IslamicFinance.de

Kenya Commercials Bank (KCB) Group has launched its Islamic Banking unit as it seeks to tap into the growing demand for Islamic financial products across the East African region. KCB Group Chairman Ngeny Biwott said the move is aimed at tapping investments in the Islamic financial sector to help spur capital flows. Biwott said the launch is part of the Bank’s long term vision to diversify its product offering while riding on technology as it reaches out to more citizens across the East African region and beyond who feel left out by the conventional banking system. In addition to the Kenyan operation, KCB Bank Tanzania is offering Islamic Banking services which is well supported with the regulatory framework that is in place.

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.

Dr Haron Sirima is likely to be appointed the new Central Bank of Kenya Governor following the expiry of Prof Njuguna Ndungu’s term on Tuesday. Sirima, whom analysts gave a nod ahead of fellow nominees, is currently the Deputy to Ndungu who has been at the helm for eight eventful years. Geoffrey Mwau, Economic Affairs Director at the National Treasury, Isaac Awuondo, Managing Director of Commercial Bank of Africa, and Rose Ngugi, an adviser at the International Monetary Fund make up the broader list of nominees. President Uhuru Kenyatta will announce the latter’s successor once approval has been sought by Parliament.

Kenya plans to create an enabling regulatory framework to boost Sharia financing in the country. The country's Capital Market Authority is holding a workshop in Nairobi. Islamic finance, which follows religious principles such as bans on interest and gambling, is currently offered by two full-fledged Islamic lenders in Kenya - Gulf African Bank and First Community Bank.

Kenya will issue its debut sukuk in the next financial year, not this one as some had expected, after it opted to borrow an additional $750 million from its maiden $2 billion Eurobond issued in June. Parliament is set to consider a recommendation by its finance committee to double the government’s external debt ceiling to $28 billion to fund the construction of a newrailway, port, roads and power plants. Henry Rotich, the cabinet secretary for the Treasury, said the re-opening of the Eurobond, which is expected to be completed on Wednesday, had given the government time to prepare the documentation for the sukuk issue. He said it would be issued in the finiancial year in the financial year ending June 2016.

Investment firm Kurwitu Ventures Limited has become the first Sharia-compliant firm to list at the Growth Enterprise Market Segment of the Nairobi Securities Exchange. The company has listed 102,272 shares by introduction at the GEMs making it the third company in Kenya to list on this segment. The others are real estate firm HomeAfriKa and Flame Tree Group, a cosmetics and water tanks manufacturing outfit. Kurwitu provides investment products and services that are based on Islamic laws on finances.

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.

The fast growing Islamic insurance package, Takaful, is not exclusively meant for Muslims, as it has been designed to cater for the needs of non-Muslims as well. This clarification was made by the founder of Takaful Insurance of Africa, Mr Hassan Bashir, who disclosed that the Kenya-based company’s products could bring fruitful possibilities to the doorsteps of non-Muslims as well as, not just for people of the Muslim faith. Bashir made this known at a recent chat with the media where he also revealed that non-Muslims currently constituted about 15 per cent of the company’s customer base, adding that the figure was expected to increase as time passed.

Hassan Bashir, Founder of Takaful Insurance of Africa, says the Kenya-based company's products can bring possibilities to many and are not exclusively for people of the Muslim faith. Takaful Insurance of Africa started in Kenya, but opened an office in Somalia 6 months ago, as well as expressed interest in Uganda, Djibouti and Tanzania. Hassan Bashir believes that Islamic finance can bring possibilities to many people by helping them get employment and access to finance. With the company's index-based livestock takaful, pastoralists are continuously educated so that they understand that the cover is in line with their religious sensitivities and this is to sustain their livelihoods despite droughts. In the long run, this will solve the negative perceptions about Islamic finance.

A delegation of the Qatari Businessmen Association (QBA) visited Kenya last week to enhance bilateral business relations between the two countries and open up new areas of investment. The delegation was headed by Sheikh Dr Khalid bin Thani bin Abdulla al-Thani, second deputy to QBA chairman and Ezdan Holding chairman. The delegation included Ezdan Holding CEO Ali Mohamed al-Obaidly and Vodafone Qatar CEO Kyle Whitehill among other businessmen and QBA members. The delegation was received by Kenya’s Minister of Foreign Affairs and International Trade, Amina Mohamed, who brought them together with senior officials from the Kenyan Ministry of Foreign Affairs and members of Kenya’s business community. Sheikh Dr Khalid said Kenya has become a promising and attractive business environment.

The laws regulating Islamic financing in Kenya need fine tuning to fully support sharia compliant banking, First Community Bank general manager Omar Sheikh has said. At the moment there is no double taxation for the murabaha contracts but the law ought to be clear on this matter for future operations. Sheikh also cited the loss sharing principle as a matter that creates confusion in terms of declaration and their accounting statements whereby while sharia law requires that profit and loss be shared among the bank and clients, the local industry's guidelines require that they record it as loss provision in their books. Sheikh urged non Muslims to also seek services at the bank adding that wrong perception that the lender is restricted to Muslim clients has been the biggest challenge to its growth.

The International Finance Corporation, the private-investment arm of the US-based World Bank Group, has announced that the Gulf African Bank (GAB) in Kenya has become a member of its Africa Micro, Small, and Medium Enterprise Finance Program. Through this program, GAB will receive advisory services from IFC in the areas of accessibility for customers, speed of service, adding new products and customer relationships. In 2013, IFC paid USD 5 million for a stake of undisclosed size in GAB. As of December 2013, GAB had total assets of KES 16 billion (USD 184 million). IFC has 182 member countries and reported total assets of USD 77.5 billion.

A mutual insurance scheme based on Islamic Sharia law has been launched to reduce the impact of extreme weather events on pastoral livelihoods in Kenya’s arid northern regions where perennial drought often decimates thousands of livestock. The Islamic Takaful insurance is boosting risk management. Those insured under the Tafakul scheme are compensated for the loss, or reduction in value, of their livestock based on an index formulated by the International Livestock Research Institute (ILRI), and according to information gathered by satellites to measure vegetation coverage and thus the severity of drought. Recently, some 101 livestock farmers received their first pay-out.

With Islamic financing growing significantly in Kenya over the last five years and now accounting for 2% of the country's total banking industry, it's not surprising that Standard Charted chose Kenya as the first African nation in which to launch its Sadiq suite of Islamic banking products. Trade Finance caught up with Wasim Saifi, Standard Chartered's global head of Islamic banking, to find out what Islamic trade products it has planned for Kenya and why the bank sees Africa as the new growth frontier for the $1 trillion plus Islamic finance market.

Researchers in Kenya have developed a pioneering insurance policy for nomadic Muslim livestock herders, which has now delivered its first payout of approximately $5,800 to 101 farmers to compensate them for drought losses. The policy, which was purchased by about 4,000 pastoralists in Northern Kenya, was developed by the International Livestock Research Institute and commercially delivered by Takaful Insurance of Africa. Since the farmers usually habitat isolated areas, index-based insurance works better than traditional insurance. For Takaful Insurance of Africa, the project is a leap of faith, as they are not currently making a profit. However, hopes are the project will eventually be self-sustaining.

Islamic banking was introduced in 2008 in Kenya when the first two Islamic Banks, Community Bank (FCB) and Gulf African Bank (GAB), opened their doors. Islamic finance has evolved rapidly into insurance, investments, and pensions which are in line with the Islamic law. Owing to the success of the two Islamic Banks in terms of attracting deposits from the Muslim community, other commercial banks have quickly opened up Islamic segments to compete for the Muslim wallets. Currently, 10 out of the 42 commercial Banks in Kenya have created such segments. However, one of the main challenges facing Islamic finance in Kenya is lack of Shari`ah-compliant investment instruments in the financial markets, such as shares, stocks and bonds.

Standard Chartered Bank sees great potential for Islamic banking in Kenya with only two percent penetration to the total banking business. Standard Chartered Bank’s Global Head of Islamic Banking Wasim Saif says with the population of Muslims being 10 percent in the country Islamic banking could grow to a double digit number in the next five years. That's why the bank launched its Islamic banking offering in Kenya under the brand name Saadiq. Saadiq becomes the first market of Standard Chartered’s African footprint for Islamic banking, and is considered a platform to enter in other African markets that include Tanzania, Uganda, and Nigeria in two to three years. The new window will offer Shariah compliant products that include personal banking, home financing, as well as business and corporate banking.

Dubai Islamic Bank plans to expand its operations into Asian and African countries as it emerges from a period of consolidation, the bank's chief executive Adnan Chilwan said. The lender, which currently makes some 95 percent of its revenue within the United Arab Emirates, says it is entering a growth phase domestically and internationally. It is exploring opportunities in Indonesia, Kenya and surrounding countries in Africa, the Indian subcontinent and the GCC. Expansion could be realized via acquisition, a Joint Venture, a finance company or a greenfield operation as long as DIB keeps management control and operates under its brand, Chilwan added. However, Chilwan said the bank also expected strong growth in its domestic market, so the balance between local and international business would not change radically.

Dubai Islamic Bank has revealed plans to expand its operations to Africa as well as Asia, as it seeks growth for its domestic and international business. According to DIB’s chief executive Adnan Chilwan, the bank is exploring opportunities in Indonesia, Kenya and surrounding countries in Africa, the Indian subcontinent and the GCC, with the hope of doing this via acquisition, Joint Venture, establishment of a finance company, or through a greenfield operation startup. Given a five-year scenario, the bank expects a decent franchise spread across these countries with stable and solid yields across all sectors. International business is estimated getting at best 10 to 15 percent of the overall group numbers in about six to eight years.

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.