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Friday, 5 July 2013

Standard Chartered will start offering Islamic banking in Kenya

NAIROBI (Reuters) - Standard Chartered Plc will start offering Islamic banking in Kenya as a springboard into the rest of Africa and it may expand services in Indonesia, its global head of Islamic consumer banking said on Wednesday.
Shariah-compliant banking makes up two percent of Kenya's banking industry, split between two Islamic lenders and conventional banks with Shariah-compliant products, like Barclays Kenya .
"We are looking at Africa as the next frontier for the Islamic banking sector," Wasim Saifi told reporters in the Kenyan capital, where he attended an Islamic finance conference.
He said the bank would offer the services through its Islamic banking brand, Standard Chartered Saadiq, targeting the country's official Muslim population of 4 million people, 10 percent of the total, as well as non-Muslims.
"One of the main reasons for doing that is primarily because the local market place for Islamic banking is already well developed," he said.
The two Islamic banks operating in Kenya, Gulf African Bank and First Community Bank, were licensed in 2008. A Takaful insurance company has also begun operating in the past two years.
Saifi said the new products will first be launched in Kenya, then in other countries in east Africa and west Africa, as well as further afield.
"We are looking at numerous countries for extending our Islamic banking footprint. One market that excites us a lot is Indonesia," he said.
Standard Chartered currently offers Islamic banking in Indonesia through associate Bank Permata .
With the biggest Muslim population in the world, the country has a five percent penetration rate for Islamic finance, which is set to triple or quadruple in the next five-ten years, Saifi said.
(7 News / 04 July 2013)

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Nigeria: Islamic Finance For Development

Central Bank of Nigeria governor Sanusi Lamido Sanusi recently expressed the need for Nigeria and other African countries to tap into opportunities provided by Islamic financing to fund infrastructure development on the continent. Sanusi, who spoke at a conference on Islamic banking, pointed out that Islamic bonds called Sukuk, if well developed, could serve as a financing option and complement government’s efforts in infrastructure development. Authorities in this aspect of financing say it is a depository institution of financial intermediary that specialises in providing finance on sale, lease or sharing bases; Shari’ah is a criterion for financial transaction, with its tenet of non-profit modality.
It is widely accepted that conventional banks in Nigeria have failed to finance development because of their overdependence on profit. This is not bad in itself because it is the whole essence of business. But banks are expected to be the engine of national development activity particularly in the strategic sectors of the economy. They should also drive growth through the creation of opportunities capable of generating resources that can have a multiplier effect on the economy generally.They have not done this satisfactorily. It is a known fact that banks in Nigeria go into areas of little or no risks -- buying and selling --ignoring such areas as infrastructure development, real sector, agriculture and housing.
In spite of incentives by government to drag them into some of these core areas of economic activity, the response has been, at best, lukewarm. They claim that cost and tenor of funds make it difficult to invest in areas with long gestation. They also blame these for the high interest rate regime that is capable of discouraging the most optimistic fund user from sourcing money from the system. Yet, as revealed not too long ago, the level of mismanagement and bare-faced stealing by highly-placed insiders proves that the conventional banks, at least in Nigeria, were not set up to push economic growth.
It is on the basis of this realisation that we are persuaded to argue in favour of any other system, Islamic finance included, that can help speed up things in the nation’s quest for growth and development. Experts in Islamic finance like Sanusi have assured that a borrower who meets other criteria required in the transaction processes accesses funds interest-free. And this is regardless of the borrower’s religious persuasion.
Such source of easy finance is what this country needs at this time, if only the debilitating stereotypes like religious and cultural affiliations were done away with. We, therefore, support any effort to expand this financial system. It has the potential to succeed where the conventional banks have failed.
(Leadership / 03 July 2013)

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