First Community Bank (FCB) has introduced an Islamic-compliant unit trust underlining the growing list of Islamic products targeting the Muslim market.
The firm has received approval from the Capital Markets Authority (CMA) to rollout the fund, which will make selective investments in equities, government bonds and real estate options that are Sharia-compliant.
The new unit trust fund adds to the Islamic banking, insurance services, food, medicine and hospitality products launched in the country in the past few years by firms like FCB, Gulf African Bank and Takaful Insurance of Africa.
Players are hopeful that Islamic financial services will take off, arguing that the market is largely untapped.
“Islamic finance is an alternative investment that is yet to be tapped. A lot of Muslims want to buy bonds or stocks but they cannot because the products are not structured to satisfy their faith,” said Nathif Adam, the chief executive of FCB. “We see this move as strengthening our portfolio of Islamic financial services,” Mr Adam said.
FCB has been seeking to expand its financial services venturing into takaful – Islamic insurance services— last year in partnership with Cannon Assurance.
Its banking business, which was started in 2008, is yet to break even but has seen a reduction of losses.
In the six months to June last year, the bank made a net loss of Sh67.8 million, representing a reduction of 24 per cent compared to the net loss of Sh89.1 million a year earlier.
Mr Adam attributed the sustained losses to an ongoing expansion plan that saw the bank open six new branches last year, adding that the bank should break even
Kenya’s 4.3 million Muslim population, whose numbers have more than doubled in the past two decades and are richer than ever before is being seen as the reason for main driver of the attention business is paying to their interests.
It has also helped that Kenya has become the natural destination of choice for thousands of rich Somali Muslims fleeing two decades of war in their country.
Sharia law bars financial services providers from earning or charging interest and instead offers a return to savers by sharing profits from ethical businesses that do not include alcohol, tobacco and gambling.