Lack of Relevant Laws Constrains Growth in Islamic Finance

Nairobi ( — With Islamic banking and insurance gaining ground in the country, there are calls for new legislation by banking and insurance regulators to enable the companies to invest in Sharia-compliant securities.

Two banks – Gulf African and First Community – are operating fully pursuant to Sharia-compliant banking principles, although up to five other commercial banks are also offering Sharia-compliant banking products alongside conventional products.

And three weeks ago, Kenya’s first Islamic insurance firm, Takaful Insurance, was launched. The company opened its first branch in Eastleigh, Nairobi last week.

With these developments, a comprehensive change is needed in Kenyan banking laws to implement interest-free economic systems, according to Islamic banking scholar Ali Mohamed.

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