Nairobi: Kenya is preparing to allow the use of Islamic finance, and is even preparing to launch its first sukuk (Islamic bond) and also join the Organization of Islamic Cooperation (OIC) countries, Anadolu Agency reported.
When Muslims do business in Kenya - a Christian-majority country - they have not been able so far to apply Islamic Shariah law as most Kenyan institutions are not accustomed to it. But the government is now taking steps to bridge this gap.
Speaking at the International Islamic Finance conference of Africa, the first ever summit of its kind held on African soil, in Nairobi last Monday, Treasury Secretary Henry Rotich said that the Kenyan government would adopt legislation that would make Islamic finance possible – previous financial legislation did not permit the use of the alternate forms of banking and insurance which is based on interest-free banking transactions.
“Kenya will be issuing Shariah-compliant sukuk in the coming year, and these will be used to finance infrastructure. Kenya will also join the Organization of Islamic Cooperation (OIC) countries and adjust rules and regulations in the financial sector to support Shariah-compliant products in the market,” Rotich said.
The conference is intended to aid developing countries in Africa to tap into the $2.1 trillion market of Islamic finance, using it as a catalyst of economic growth. Kenya can learn about the application of Islamic finance by taking advice from Muslim countries, he added.
Policymakers’ business leaders and government officials spent Monday and Tuesday speaking on how Islamic financial principles can help combat poverty and alleviate poverty in Africa.
Developing countries were given a chance to learn from actors in more mature markets on how to use Islamic microfinance as a tool for promoting economic growth for low-income workers and business owners.
It is hoped that the development of Islamic Finance in Africa will help woo investors from Muslim countries to come and invest in developing countries in the region, conference participants said.