Kenya to launch first sukuk this year
The country is looking for alternative methods to finance infrastructure.Kenya is about to launch its first Islamic bond, Treasury Secretary Henry Rotich announced at the International Islamic Finance conference of Africa held in Nairobi last week.
"Kenya will be issuing Sharia-compliant sukuk bonds in the coming year, and these will be used to finance infrastructure, Kenya will also join the organisation of Islamic countries and adjust rules and regulations in the financial sector to support Sharia-compliant products in the market," he said, quoted by Anadolu Agency.
The conference is looking to help developing countries in Africa to tap into the $2.1 trillion market of Islamic finance, using it as a catalyst of economic growth.
The Islamic finance sector has a high development potential in Kenya, with only two per cent penetration to the total banking business although 10 per cent of the country's population is Muslim.
The country's large Muslim community and the growing demand for Islamic finance and insurance are forcing financial institutions and insurance companies to evolve and adapt in order to take advantage of this market.
Since the introduction of Islamic finance in the country in 2008, two Islamic banks (providing only Sharia-compliant products) have been created, and many commercial banks and insurance companies now offer Islamic finance and insurance products, called Takaful.
The first Islamic reinsurance product in Kenya was launched by the Kenya Reinsurance Corporation in 2014.