The fastest growing economy in the region, Kenya, has laid down strategies to become Islamic Finance hub in its continent which has consequently seen various stakeholders bring in tons of efforts in realizing the achievement. This positioning comes in the wake of government’s pledge to develop a Shariah-compliant fund reformation and banking framework in as part of approaches to grow foreign direct investments. The focus is also aimed at bridging funding gaps in the country’s infrastructure projects, bringing equality to the citizens and alleviating poverty. In her unshaken commitment, the country has united with Islamic Financial Service Board which is in Malaysia mandated to standardize and endorse sound and clear Islamic Financial services in the whole world which helps in availing guidance which is necessary for gearing towards the goal.
Islamic banking which is the key component of Islamic Finance in the country is at a nascent stage in gaining its popularity. It is developing its roots deep into the country’s economy after the ministry of Treasury, lawmakers, and insurance companies came together and unveiled plans and various products that can see it thrive. With the Muslim community accounting for nearly 15% of the total population, the government through National Treasury amended laws relating to finance and issued out new rules which would abet in facilitating retirement remuneration scheme which is Sharia-based. Changes were also made in Public Finance Management Act, which is the key law governing the relationship of the public funds and citizenry, to pave way for the issuance of Sukuk, which is also referred to Islamic Bonds. The knowledge of Sukuk would easily reach the persons of Islamic faith and all others who would gain interest, through banking and other financial institutions by issuing licenses to the Islamic Banks intended to be established in the country. It is upon this understanding therefore that Central Bank has seen Islamic banking mushrooming, something applauded by many stakeholders. Currently, the country has three fully operating Islamic Banks which are first community Bank, Gulf African Bank and lately Dubai Islamic Bank each having several outlets across the land. Dubai Islamic Bank is the latest, was licensed by Central Bank of Kenya in 2017 and it has managed to open its three branches in the country with two being in the capital city. There is also Takaful Insurance Company, a Sharia-compliant mutual fund, and two cooperatives. It has been nearly a decade now since the first Islamic bank to be in place in the country and its quick growth exhibits the commitments towards the goal.
The robust opportunity for Islamic Finance and the big budding in enabling the country to be recorded in the international scene has seen the National Treasury were on the frontline in ensuring the plans are achieved. The establishment of Islamic Finance Management Project Management Office by the ministry was intended to coordinate efforts among its regulatory agencies which would see implementation be very rapid. The body is guided by internationally-recognized law firm named as Simmons & Simmons whose expertise is in Islamic Finance.
In its endeavors to deliver the mandate, Islamic Financial Project Management Office, encountered several challenges including lack of technical proficiency, inadequate infrastructure, deficiency of definite policies, short of human capital to manage the unique business, regulatory and Shariah governance frameworks and also of lack of awareness among all stakeholders. There have also been security issues in the country which has been a big challenge in fostering for the Islamic finance.
In its attempts to combat the challenges, PMO developed sufficient policies, regulatory frameworks of governance which are Shariah-based and capacity building for the market
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