First Sharia-compliant sacco launched

 

National Bank of Kenya headquarters in Nairobi. The bank has unveiled a new Islamic Banking unit dubbed National Ammanah. Photo/File 

By VICTOR JUMA

In Summary

• Crescent Takaful Sacco Society Limited (CTS) will Tuesday become the first Islamic sacco to run front office operations such as deposit-taking and lending.
• Investors launching more Sharia-compliant financial services are betting on increased demand from the growing Muslim population which is estimated at 4.3 million, according to the 2009 census.
• The sacco will offer savings, lending, and investment services based on the Islamic principles of profit sharing in collective ventures, shunning interest that defines conventional finance.

The government has licensed the first Sharia-compliant sacco in the country, underlining the growth of Islamic financial services.

Crescent Takaful Sacco Society Limited (CTS) will Tuesday become the first Islamic sacco to run front office operations such as deposit-taking and lending. Its membership will be open.

The launch of CTS comes after two Islamic banks formed in 2008 — Gulf African Bank and First Community Bank — have turned a profit and expanded beyond Nairobi in what is seen as the growth potential of Sharia-based financial services.

Their performance is seen as an untapped potential of Islamic financial services.

Investors launching more Sharia-compliant financial services are betting on increased demand from the growing Muslim population which is estimated at 4.3 million, according to the 2009 census.

Overseas clients

“Crescent Takaful Sacco Society Limited will launch (today) as the first Shariah-compliant sacco,” the company said in a statement.

The sacco will offer savings, lending, and investment services based on the Islamic principles of profit sharing in collective ventures, shunning interest that defines conventional finance.

It will extend these services to Kenyans in the diaspora, becoming the third sacco to cater to overseas clientele after the UK Diaspora Sacco and the US Diaspora Sacco.

Promoters of the sacco include Crescent Investment Co-operative Ltd and Takaful Insurance of Africa Group besides local individual investors.

CIC Insurance chief executive Nelson Kuria, is listed as one of the sacco’s directors.

Other conventional banks have also developed Sharia-compliant current accounts while conventional insurers are eyeing new opportunities in Sharia-compliant products.