Kenya is keen on laying a strong foundation for the seamless operation of Islamic Finance in the country.
Islamic finance has rapidly grown not only in Kenya but in Africa, with investors, governments, and financial institutions increasingly leveraging its potential for both financing and development.
Speaking on Thursday at a workshop on formulating National Policy on Islamic Finance, National Treasury and Planning Principal Secretary, Dr. Kamau Thugge said Islamic Finance represents a small but growing segment of the global assets.
Assets held under Islamic finance are estimated at Sh. 340 trillion (USD3.4 trillion) from about Sh. 170 trillion (USD1.7trillion in 2016.
The government, the PS said has already taken bold steps towards preparing the ground for operationalization of Islamic Finance in the country.
In a speech read on his behalf by Director General, Budget, Fiscal and Economic Affairs, Dr. Geoffrey Mwau, the PS said embracing Islamic financial products is geared towards making the country a regional Islamic Financial hub.
“Kenya’s development blueprint and the Vision 2030 predicts the financial services sector is being transformed into a vibrant and globally competitive sector that will drive high levels of savings to finance the country’s investment needs” Dr.Thugge said.
Thugge further noted that the Financial Services Sector (FSS) is critical to the achievement of the Vision 2030 target of double digit annual average economic growth.
This, he added would stimulate significant increase in investments and savings through mobilization of both domestic and international resources.
The transformation, he however, said will entail doubling deposit mobilization from 44 to 80 percent of Gross Development Product (GDP) and enhancing growth of savings channeled into productive investments from 14 to over 30 percent.
“The aspirations articulated for the FSS is to create a vibrant and globally competitive financial sector that will promote a high level of savings to finance Kenya’s overall investment needs”, added Thugge.
Since 2014, the PS said Sh. 23 billion (USD2.3 billion) in Islamic bonds dubbed “ Sukuk”, have been issued in the continent, with the number of licensed Islamic financial institutions, rising to over 80 in the last five years,” he said.
The ministry, Thugge said has made amendments to anchoring sub-sectoral regulatory laws in order to level the ground so that conventional finance and Islamic Finance are objectively treated before the law and for tax neutrality purposes to expand the financial sector.
By Mohamed Ali/Wambui Moraa