Business
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 in east Africa’s biggest economy. 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 such as asset management, venture capital, private placements and Islamic finance.
“It will be launched in coming weeks,” a spokesman for Kenya’s Capital Market Authority (CMA) told Reuters. Sharia-compliant structures are seen as important to support funding of Kenya’s infrastructure projects, with the CMA dubbing Islamic finance a “priority”. Most estimates put the number of Muslims in Kenya at only about 15 percent of the population of 40 million.
But Islamic finance, which is also being developed by several other sub-Saharan countries in Africa such as Nigeria, could help Kenya attract investment from cash-rich Islamic funds in the Gulf and southeast Asia.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 (FCB), as well as the Islamic windows of several conventional banks.
They will be joined this year by the country’s first retakaful (Islamic reinsurance) firm, as Kenya Reinsurance Corp ventures into the sector, the CMA said in its draft plan. Takaful Insurance of Africa, the first full-fledged takaful company in the country, was launched in 2011.
The CMA has also approved Genghis Capital to operate an Islamic collective investment scheme, joining FCB Capital; the regulator has introduced rules allowing the creation of sharia-compliant real estate investment trusts. “It will be launched in coming weeks,” a spokesman for Kenya’s Capital Market Authority (CMA) told Reuters.
Sharia-compliant structures are seen as important to support funding of Kenya’s infrastructure projects, with the CMA dubbing Islamic finance a “priority”. Most estimates put the number of Muslims in Kenya at only about 15 percent of the population of 40 million. But Islamic finance, which is also being developed by several other sub-Saharan countries in Africa such as Nigeria, could help Kenya attract investment from cash-rich Islamic funds in the Gulf and southeast Asia.
