Safaricom has unveiled a shariah compliant micro-credit loan tailored to providing alternative financial services and solutions to its Muslims customers.
The firm is partnering with Gulf African Bank, premier shariah compliant financial institution, to provide the product dubbed, Halal Pesa, to its M-PESA users across the Country.
Safaricom Chief Executive Officer (CEO), Peter Ndegwa, and Gulf African Bank Managing Director (MD), Abdalla Abdulkhalik, said the saving and credit facility has been developed to provide services that conform to the Islamic principles and to address the need of the Muslim population.
“We did not have a credit facility that caters for the needs of our Muslims customers and therefore the product we are launching today to address that gap,” Ndegwa remarked, during the launch of Halal Pesa, inside Mombasa’s iconic Fort Jesus monument.
He further stated that Halal Pesa will empower M-PESA customers, who have previously been locked out of access to financing due to barriers such as lack of Shariah modelled mobile facilities.
“We remain keen on partnerships that enable us to provide a wide variety of financial solutions that meet the diversified needs of our customers further broadening financial inclusion to ensure that we leave no one left behind,” added Ndegwa.
The Safaricom Chief further said the company also expect the interest free micro-credit product to attract and benefit the country’s Small and Medium Enterprises (SMES) traders and attract other partners across the borders.
Abdulkhalik said Safaricom customers will access financing through Halal Pesa service by receiving the amount requested in full with a repayment period of 30 days at 5 percent commodity Murabaha margin.
According to the British Based Institute of Islamic Banking and Insurance, Murabaha is an Islamic finance technique involving a contract of sale between the Bank and its client for the sale of goods at a price plus an agreed profit margin for the bank.
The contract involves the purchase of goods by the Bank, which then sells them to the client at an agreed mark-up and repayment which is usually in installments.
The Gulf African Bank MD revealed that the Bank will buy palm oil from Malaysia and trade it with the Safaricom M-PESA customers through Halal Pesa platform based on Murabaha Islamic finance principle
“Kenya is now a highly innovative, interconnected and fast-paced community that requires solutions on the go. All our digital offerings, including Halal Pesa, seek to directly address this aspect,” said Abdulhalik.
He added: “Our current strategy is focused on digitization for financial inclusion. Our aim is to provide instantaneous access to interest-free credit through Halal Pesa. We are glad that we could partner with a like-minded partner like Safaricom limited to advance this vision.”
By Galgalo Bocha