Kenya Holds Meeting to Promote Islamic Finance

NAIROBI - Efforts by Kenya to promote the development of the country as a centre of excellence in Islamic financial products have gathered steam with a meeting here of stakeholders from its Capital Markets Authority (CMA), the Islamic financial services industry, government agencies and international experts.

CMA Acting Chief Executive Paul Muthaura told the gathering Tuesday that the deliberations would help in leveraging relationships with regulators and financial market infrastructure providers to support the development of the Islamic finance sector.

The capital markets industry has prioritized the development of Kenya as a centre of excellence in Islamic finance as a key priority under a 10-year blueprint for the transformation of Kenya into the heart of capital markets investment on the continent.

With an intention of unlocking the potential of Shariah-compliant investments to support infrastructure projects in Kenya, the CMA had earlier convened a stakeholders meeting with the Islamic Research & Training Institute and the Malaysia International Islamic Financial Centre (MIFC) to come up with recommendations and develop a plan of action towards developing a formal Islamic finance framework.

Muthaura said the deliberations were to enable Shariah-compliant financial services to respond to the investment diversification as well as funding needs of the economy.

"In the context of the recent announcement by the Government of Kenya that it will be seeking to issue its first Sovereign Sukuk in the near future, it is critical that the domestic financial markets are effectively prepared to leverage the opportunities arising from that increased visibility by providing a wider diversity of products to attract local, regional and global funds seeking ethical or Shariah compliant investments through the development of a globally competitive policy, legal and regulatory framework."

Development of Islamic finance in Kenya over the last five years has been on an upward spiral, with the licensing of two Islamic banks by the Central Bank of Kenya, licensing of an Islamic insurance (takaful) company, registration of an Islamic Collective Investment Scheme, licensing of an Islamic asset manager, and the introduction of a Shariah component in the Real Estate Investment Trust regulations.