KBA CEO CHAT - Islamic Financing Options

CEO | Abdalla Abdulkhalik, Gulf African Bank, MD
MONTH | February 2020
David Indeje
Good morning to all of us?
Chat Admin
Good morning everyone!
Edwin Savatia
Good morning! Looking forward to today's informative chat on Islamic finance.
Chat Admin
We are pleased you could join us for today's session.
Chat Admin
The topic for today is Islamic Financing Options and our host is Mr. Abdalla Abdulkhalik, Gulf African Bank, MD
Chat Admin
We look forward to your participation as always. The focus areas of the chat are (1). Finance Options Available In Islamic Finance and (2). Growth Prospects of Islamic Finance In Kenya
Paul Wanjaiya
Good Morning everyone.
Hesborn Nyakundi
Good morning! Looking forward to today's discussion!
David Indeje
When the CEO checks in, my fist question would unregulated and unstructured finance options witjin Islamic finance. It tends to confuse people.
David Indeje
Two, any strategies to create more awareness of the same and what would our role be
David Indeje
In 2016, Islamic Banking accounted to about 2.8% of the financial sector, where are we currently?
Frederick Buire
Good morning all. Kindly let the CEO, Mr. Abdala explain the religious underpins behind their products, is the business sustainable without the core revenue base that comes with interests, considered "haram". Are these options available to non-muslims? Regards. Many thanks.
Chat Admin
Thank you David. All, please feel welcome to share your questions and reflections on the topic of the day so we can hit the ground running at 10 sharp
David Indeje
What makes Islamic finance attractive to investors, what is normally the value proposition?
maina NJUGUNA
Good morning, we're ready for today's chat...
Julius Njoroge
Good morning everyone. what are the risks faced by a bank in Islamic finance
maina NJUGUNA
How can Islamic Financing come to the aid of SMEs in Kenya for their capital expenditure?
Chat Admin
Ladies and gentle men, please welcome our host Mr. Abdalla Abdulkhalik, Gulf African Bank, MD who will take us through the chat session
Roselyne Njino
There are a few questions coming in through twitter. "Instead of RIBA, what is your equivalent to factor the financing issued for repayment at a permium?..."
maina NJUGUNA
Can we also get a simplified breakdown of Islamic banking services?
Roselyne Njino
"Can non-muslims apply for financing on the Islamic Banking option without changing faith?"
maina NJUGUNA
Do Islamic Financing have a component of asset financing?
maina NJUGUNA
Does Islamic Financing offer LPO financings to SMEs and individuals?
Abdalla Abdulkhalik
Good morning everyone. Thank you for joining the chat . I look forward to your questions and participation.
Abdalla Abdulkhalik
I can see a couple of questions. I would like to start with David Indeje's questions...
Abdalla Abdulkhalik
David, there has been some marginal growth since 2016. Currently it is estimated at 3%, although globally it is growing at a rate of 15-20% with gross assets of over USD 2trillion.
Roselyne Njino
Twitter questions - "What are the principles that govern Islamic Banking in Kenya?"
Abdalla Abdulkhalik
On your second question, we are holding seminars and workshops to introduce the Islamic Banking concept.
Jacob Kumenda
Is Islamic banking open to all individuals from all find of faiths?
Abdalla Abdulkhalik
Good morning Fredrick...There are two fundamental concepts for Islamic banking: prohibition of interest which is considered exploitative to the borrower and secondly the sharing of profit and loss with the customer. Therefore, Islamic banking encourages trade transactions and/or partnerships in dealing with their customers. Islamic banking is open to people of all faiths.
Michael Makanga
Good Morning, It is worth that Islamic Banking is doing well in Kenya.What steps are being taken to nationalise it?
Faiz Said
What new innovative HALAL islamic products will or may be available in the near future?
Abdalla Abdulkhalik
Thank you Maina for your question. There are various programmes and initiatives being spearheaded by the Kenya Bankers Association to support MSMEs. These include the Inuka SME programme on inukasme.co.ke. Islamic banking is part of these initiatives. Additionally, we have Biashara Hubs where monthly training for SMEs are offered.
David Indeje
Sir, within the KBA and CBK. dow e have a robust regulatory environment that recognises the unique requirements and practices of Islamic finance in Kenya?
Abdalla Abdulkhalik
Thank you, Roseline. Islamic Banking principles are the same all over the world. In Kenya, we are still being regulated by the Central Bank of Kenya, just like any other bank. As mentioned earlier, the fundamental principles are: prohibition of payment or receiving interests and sharing profits and loss in a partnership transaction.
David Indeje
From Online via Juma What is the future of Islamic Banking in Kenya? Are we likely to see more non-Muslims joining?
Abdalla Abdulkhalik
Good morning Maina. A key concept of Islamic finance is asset financing. All transactions must have economic value.
Abdalla Abdulkhalik
On LPOs, we do LPO financing for government contracts.
Eric Asuma
Good morning Abdalla, what is the structure of Islamic banking with respect to Unsecured lending?
Abdalla Abdulkhalik
Good morning Jacob. Yes, Islamic financing is available to all faiths
Abdalla Abdulkhalik
Hi Michael. It may not be practical to nationalise it, but at least it is offering the option for people who are interested..
maina NJUGUNA
Does Islamic Financing assist in investing in the Nairobi Securities Exchange and GoK Treasury papers?
Jacob Kumenda
What is the impact of Islamic banking to Kenya's grassroots consumers?
Abdalla Abdulkhalik
Hi Faiz. We recently introduced the first Islamic credit card which is the first of its kind in East and Central Africa. We are looking to launch mobile financing products in the near future.
John Muriithi
Good morning Mr. Abdalla Abdulkhalik, I would love to get an opportunity to train or work in a Shariah compliant organization, are there opportunities for young people? Jummah Mubarak
Abdalla Abdulkhalik
Good morning Eric. Islamic banks offer unsecured financing to salaried individuals.
Abdalla Abdulkhalik
Hi John. We offer internship programmes to students and we invite you to apply through our HR
Fednarnd Mlati
Do you allow Christians to have accounts with you? And are they treated with the same rules as if muslims?
Fednarnd Mlati
On the credit cards you give, you don't charge interest at all?
Abdalla Abdulkhalik
Hi Maina. If you mean investing in treasury bills and stocks, then you need to go through brokers rather than commercial banks.
Abdalla Abdulkhalik
Thank you Roselyne. Islamic banks charge commission or earn through profit-sharing on financial transactions.
Abdalla Abdulkhalik
Good morning Fednarnd. On credit cards, we use a concept called 'Ujra' which is a fee-based charge depending on the usage of the card. If the card is not used, no fee is charged except for the annual fee.
Abdalla Abdulkhalik
Hi David. The value proposition is the fact that Islamic banking is founded on fairness and ethical banking practice.
Najma Jabri
Hi Mr. Abdalla, GAB has been known to be a trend setter in women banking.. what new exciting programs should we be expecting from you this year?
Angela Nyabera
Are there any programs in Islamic banking that specifically support women given women often do not own assets in alot of African cultures as they are considered care givers..this is changing but still an issue
Abdalla Abdulkhalik
Hi David. Yes, Islamic banks are regulated by the Central Bank of Kenya. CBK approves all products and services offered by Islamic banks.
Eric Asuma
What are the major modes of financing used by Islamic Banks?
Abdalla Abdulkhalik
Hi Angela. There are no specific products dedicated to women. However, GAB as a bank has put in place unique programmes to educate, empower and protect women in business. These include, but not limited to, strategic partnerships, dedicated women-only branches, tailor-made products for women in business, women-only website etc
Jacob Kumenda
Banks face many challenges especially when introducing new concepts and products in to the market so as to achieve a competitive advantage over others. What key challenges has the bank faced in its operations in Kenya?
Abdalla Abdulkhalik
Hi Najma. We have reintroduced unsecured for women in business. There are also focus groups to create awareness on trade finance. For more information visit www. annisaa.co.ke
Jacob Kumenda
In 2017, IMF warned that the rapid growth of Islamic finance in Kenya is happening without adequate protection of depositors as is the case with conventional banking. What progress have you made in ensuring depositors are protected?
Abdalla Abdulkhalik
Hi Jacob. The main challenge is the misconception that Islamic finance is only for Muslims
Abdalla Abdulkhalik
Hi Jacob. Islamic banks have two levels of governance. One is the CBK and the other one is independent Sharia advisory boards to ensure that all transactions are in compliance with Sharia law.
Jacob Kumenda
From where you seat, is it true that Kenya is yet to refine its prudential regulations to cater for Islamic banking?
Abdalla Abdulkhalik
Hi Juma. Islamic banking is gaining momentum. As we speak, there is a sizable of non-Muslims who have embraced Islamic Banking. However, Islamic institutions need to do more awareness about this concept.
Abdalla Abdulkhalik
Hi Jacob. It is true. However, CBK has put in place measures to ensure Islamic banks and commercial banks' Islamic windows are properly regulated.
maina ichagua
do you admit non muslimas customers?
Jacob Kumenda
Our current banking laws do not provide adequate guidance on the Islamic contracts acceptable in Kenya. What impact of this on the Islamic banking in Kenya?
Abdalla Abdulkhalik
Hi Jacob. Islamic banking has helped support financial inclusion since people who were unable to access finance before on account of faith can now access the services.
Chat Admin
Hi all, we will be wrapping up soon
Jacob Kumenda
The last question Bwana CEO, does Islamic banking differ from conventional Western-style banking?
Abdalla Abdulkhalik
Thank you for your participation in today's chat. If you have any further questions please don't hesitate to contact us.
David Indeje
Asante Sana Abdalla, I have learnt a lot from you.
Chat Admin
Ladies and gentlemen, we are wrapping up. Allow me to thank our host Mr. Abdalla for taking us through this session and for his insights. We also thank you for your participation and questions that have helped us learn alot on Islamic Banking
Jacob Kumenda
Asante Bwana Ceo for sharing your understanding on Islamic banking. Looking forward to learning more.
Chat Admin
We have come to the end of the February Edition of My Chat with a Bank CEO. We truly appreciate your participation and it has been an honour to have you join the chat every Friday and share your questions and thoughts
Chat Admin
We will be closing the chat room soon. Please look out for the CEO interview podcast in our archives page next week and videos from the past two chat sessions from our archives page this afternoon
Chat Admin
Have a good weekend