By Nicholas Nduati
The government is reviewing legislation on Islamic banking in measures aimed at opening up Islamic banking to more non-Muslim Kenyans.
Attorney General Githu Muigai says Islamic banking offers an alternative avenue for increasing financial inclusion in the country and that measures such as the ongoing CBK Act review as well as propositions on tax exemptions will help demystify Islamic banking.
Low levels of knowledge about Islamic banking in the country is to blame for the negative perception of the lucrative financing option by non-Muslims.
The Kenya Bankers Association is also keen on demystifying Islamic banking by among others encouraging Islamic financial institutions to change from using Arabic banking terms that seem prohibitive to non-Muslims, to common banking jargon.
Although Islamic banking has achieved a lot in the country since the opening of the first Shariah compliant bank in 2007, its penetration is at a paltry 1%. However, due to the nature of Islamic financing, offering of products such as Islamic bonds has been a challenge that the government hopes to overcome through measures such as tax exemptions.
They were speaking in Nairobi during the inaugural East Africa Islamic Finance Summit.