KCB Bank plans to enter the country’s Shariah-compliant investment funds market, a strategy aimed at deepening its footprint in the fast-growing asset management segment.
Hemed Wangalwa, head of KCB’s Shariah-compliant arm, SAHL Bank, said the growing appetite for Islamic funds presents room for growth.
“There’s a huge demand for Shariah-compliant investment funds and we, as KCB, are now working on it to see how we can partner and integrate this into our offering. One of the challenges that Islamic Finance has faced is the shortage of investment options, but rising demand is now pushing players to enter this space”, he told the BusinessDaily.
“The Middle East is doing so well in this space, and Kenya has been endearing itself to do a lot of business with the Middle East. If we want these investments to flow into Kenya, we need more Shariah-compliant vehicles, and we have held meetings to ensure that this happens. Once the groundwork is done, there’s going to be a huge opportunity and KCB wants to be the arranging bank,” the official added.
Kenya’s Shariah-compliant investment funds market currently holds about Sh1.5billion assets.
If it enters the market, KCB Bank will be taking on Standard Investment Bank (SIB), which accounts for the lion’s share at Sh1.35 billion worth of assets under management, accounting for a tidy 91.2 percent of all Shariah-compliant assets under management in the Kenyan market based on the latest disclosures by the Capital Markets Authority (CMA).
Other Shariah-compliant investment fund offerings in the market are Etica Shariah Fund (US$), which holds Sh11.78 million in assets under management; Etica Shariah Fund (Sh), which holds Sh115.59million in assets under management; and the Kenya Shilling-denominated Kuza Shariah Momentum Fund, which holds Sh1.93 million in assets under management.
KCB said that it will be banking on the regional footprint of its Shariah-compliant banking to ramp up appetite for Islamic investment fund vehicles.
“As we speak today, KCB SAHL has the biggest Shariah-compliant customer base in the country. We also plan to leverage our Group advantage because we have SHAL in Tanzania, we also have it in Burundi, and our counterparts in South Sudan are working on it as well. Uganda and DR Congo are already having this discussion. We want to set ourselves as the hub for Shariah-compliant solutions in this region”, Wangalwa says.
KCB Bank said its planned Shariah-compliant investment fund will focus on infrastructure, including housing, roads, and rail. Currently, KCB’s Unit Trust is ranked the 10th largest in the market with Sh13.32 billion in assets under management.
Kenya’s debut Sukuk (Shariah-compliant bond), a 15-year note with an Internal Rate of Return of 11.13 percent, raised Sh3 billion that has been deployed in financing the construction of affordable housing units.
