Gulf African Bank CEO Abdalla Abdulkhalik. file PHOTO | NMG
Proposed establishment of a legal and regulatory framework for
Islamic banking is likely to boost investment flows from Southeast Asia
and Middle East, Gulf African Bank CEO Abdalla Abdulkhalik has said.
There
was a significant international interest in Kenya’s Islamic banking,
especially from Southeast Asia countries, but few deals have been cut
due to non-existent legal and regulatory framework.
“There’s
a lot interest for investment out of the Muslim countries, especially
Southeast Asia countries such as Malaysia that would like to come to
Kenya. They would, however, be more encouraged if they know that they
can invest in a manner that conforms with their faith,” Mr Abdulkhalik
said in an interview.
Kenya is keen to position herself as the hub for Sharia-compliant financial services in East and Central Africa.
There
are three fully-fledged Islamic banks in the country – Gulf, First
Community and Dubai Islamic Bank– with at least 11 conventional lenders
with dedicated counters for such products.
The
International Monetary Fund in June called on Kenya to come up with
prudential guidelines for Islamic banking with a special focus on a
deposit protection framework in light of rapid growth of the industry.
“The
Banking Act itself has to include clauses to accommodate Islamic
banking so that we have a level playing field with other banks,” Mr
Abdulkhalik said. “But the central bank has been very supportive because
we have never had any product that has been turned down.”
The
government in October 2016 came up with Islamic Finance Project
Management Office (PMO) to draft proposals on policy, tax, legal and
regulatory framework for the fledgling industry.
PMO,
made up of representatives from the five financial services sector
regulators, was also tasked with coming up with reforms necessary to
promote growth and development of Islamic financial services in the
country.
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