Dubai Islamic Bank’s (DIB) formal entry into the Kenyan market is expected to shake up locally-owned Islamic lenders that have faced little competition in the segment for a decade.
The Central Bank of Kenya (CBK) on Friday opened the door for the bank, which is a fully owned subsidiary of Dubai Islamic Bank into the local market after more than a year of waiting.
Kenya has until now had only two fully-fledged Islamic banks, while five other conventional lenders have been offering Shariah-compliant services and products through “Islamic Windows”.
The CBK said in a statement on Friday that DIB intends to exclusively offer Shariah compliant banking services in Kenya.
“It becomes the third fully Shariah compliant bank to be licensed in Kenya, after Gulf African Bank Limited in 2007 and First Community Bank Limited in 2008,” said CBK adding that DIBs entry is expected to expand offerings in the market, particularly in the nascent Shariah compliant banking niche.
The Dubai lender is expected to leverage its financial muscle as it seeks to claim a piece of the fast growing Islamic banking market.
As at September last year Dubai Islamic Bank had an asset base of $47.6 billion (Sh4.85 trillion) and capital of $7.4 billion (Sh754.8 billion).
DIB has a presence in Bosnia, Indonesia, Pakistan, Sudan, Turkey and UAE.
The CBK said DIB’s choice of Kenya as its entry point into Sub-Saharan Africa signals “Kenya’s growing stature as a premier regional financial services hub.”
“This also signifies the first entry of a United Arab Emirates (UAE) bank in Kenya to support the long-standing economic ties between Kenya and the UAE,” it said.
DIB makes its foray into Kenya at a time authorities are keen to make Kenya a hub for Islamic finance in Africa with ongoing reforms expected to drive the growth of Islamic-finance operations.
The Kenyan government has recently unveiled a package of initiatives aimed at developing a policy framework for Islamic finance in the country.