Loading the player...
Kenya's Islamic finance drive to tackle taxes, governance
The country wants to build up the industry as part of a long-term plan to turn Nairobi into an international financial centre and as a way to help finance infrastructure projects by building commercial links across Africa and the Middle East.
The initiatives are being led by the Islamic Finance Project Management Office (PMO), a body setup recently to coordinate efforts among Kenya's regulatory agencies.
The PMO has submitted an initial set of policy amendments focused on taxation of sharia-compliant products, said Farrukh Raza, managing director of IFAAS, an Islamic finance consultancy which designed the PMO's framework.
"This will be the first precursor to overall industry development by giving legal recognition to Islamic finance transactions," Raza said.
The aim is to ensure neutrality of Islamic contracts in areas such as stamp duty and withholding tax, with the proposed amendments to be included in a finance bill to be presented to the parliament next year, he added.
Kenya's decade-old Islamic finance sector includes two full-fledged Islamic banks and several Islamic windows, but until now they have operated by way of exemptions, and a lack of clear rules have stunted growth, said Raza.
A second batch of policy amendments will be presented by the end of this year, covering banking, insurance, pensions and capital market products - including a framework for sukuk or Islamic bonds.
Plans also call for establishing a sharia governance framework and a national sharia supervisory board, which could be in place by the first half of next year, said Raza.
Islamic banks have traditionally practiced self-regulation in terms of their adherence to religious principles, but a centralised approach is gaining traction to help standardise contracts and address consumer perception concerns.
"Over the past decade sharia compliance has been a challenge for them. Differences in opinions have led to some issues and these have affected take-up," said Raza.
The PMO, which has a team of five government officials including from the Capital Market Authority and the central bank, is also tasked with developing industry awareness and human capital for the industry.
Kenya's National Treasury has said it is looking at the possibility of a debut sale of sukuk, although it has yet to finalize details for such an issuance.
- 2:03 PPAF awarded for services towards financial inclusion
- 3:28 Alliance Islamic Bank launches social crowdfunding platform
- 3:34 Only 1.6 pct of green bonds issued in Q1 2019 were Shariah-compliant sukuk – Moody’s
- 3:06 Fintech to help Qatar become Islamic finance hub QFC
- 1:56 UAE bank awards Dh1 million to Indian expat after maintaining account for six years
- 2:46 5th International Islamic Finance Executive Program Concludes in Jeddah
- 2:31 Islamic Finance Set To Tackle Long-Standing Repo Challenge
- 3:29 GCC to drive surge in Islamic finance
- 2:36 Malaysia exports Islamic Finance Expertise to Drive Russian Islamic Finance Ambitions
- 3:49 Bank Asya Seizure Hastens Turkey's Islamic Finance Drive
- 0:59 Islamic Management and Governance Centre
- 1:07 Islamic Management and Governance Centre to be set up in Dubai
- 4:03 UNIT 3 RIBA, INTEREST AND PROFIT A
- 3:09 UNIT 3 RIBA, INTEREST AND PROFIT B
- 3:07 UNIT 3 RIBA, INTEREST AND PROFIT C
- 3:29 UNIT 3 RIBA, INTEREST AND PROFIT D
- 19:37 Economic System Of Islam Part 01
- 26:27 The foundation of Islamic Economics Part 02
- 37:10 Finance and Financing Part 04
- 13:49 Basic Principles of Islamic Economics Part 03
- 2:44 UNIT 1 ECONOMIC SYSTEM OF ISLAM PART I
- 4:21 UNIT 1 ECONOMIC SYSTEM OF ISLAM PART H