Sharia-friendly bank starts business

Story by NATION Correspondent

Kenya’s first fully fledged Islamic bank has opened its doors, with two branches already operating in Nairobi.

At a media briefing on Thursday, Gulf African Bank’s chief executive officer, Salim Abdalla said the branches in Nairobi’s Upper Hill and Eastleigh areas began operations in January.

Another branch will be opened in two weeks on Kenyatta Avenue, while a fourth is planned for Mombasa in two months time.

Gulf African Bank, along with First Community Bank, was granted its licence last year by the Central Bank of Kenya.

Sharia-compliant banks are targeting six million members of the Muslim community, many of whom do not have accounts in conventional banks because some of the products offered are not inconsistent with their faith.

“Our bank offers products and alternative solutions that address the needs of everyone. A full range of banking services is available to individuals, corporates and institutional clients,” said Mr Abdalla.

Products

Finance minister Amos Kimunya opened a window for the introduction of Sharia compliant banking products in the 2006-07 budget. Since then, several conventional banks have introduced Sharia-compliant products.

However, they can only offer limited range of the same, since they charge interest, which is prohibited by Muslim faith. Only current accounts conform with Sharia law. Mr Abdalla said his bank’s five year plan is to open branches in other East African Community states, and sell shares to the public through an initial public offer (IPO).

The bank also plans to increase its capital base to $100 million (Sh7 billion) in the next five years.

Currently it has a capital base of Sh1.75 billion, and shareholding includes Istithmar 32 per cent, Bank Muskat International 22 per cent, Abdallah Mohammed, 21 per cent, Gulfcap 10 per cent, PTA Bank five per cent and a group of Kenya investors 10 per cent.

Mr Abdalla said they would link Kenyans to surplus capital in the Middle East.