Gulf African Bank and Safaricom are set to launch a Sharia-compliant banking service through M-Pesa to allow customers open and operate M-Sharia bank accounts.
The M-Sharia platform to be rolled out by next March targets the bank’s retail and merchant segments.
Gulf on Wednesday said the platform being developed by the two parties will be guided by the Sharia principles — not an interest based financing but profit sharing.
“We are targeting the market which has been left out (financially excluded) due to interest rate capping law or ethical aspects. If you borrow from these other platforms like M-Shwari, interest rate and compounding interest rates are very exorbitant, and a lot of people are shying away. We are coming to provide a solution to that segment both for Muslims and non-Muslims. This product will be guided by the Sharia principles,” said Abdullahi Adan, the bank’s head of consumer banking.
Islam forbids the charging of interest on credit and money is advanced on a joint ownership arrangement known as asset banking.
Retail customers will be able to borrow cash through their mobile phones from as little as Sh100 to Sh200,000, while merchants will have a chance to buy stocks by borrowing through that platform from Sh50,000 to Sh500,000.
The tenor for the retail service will be 30 days, while that for merchants will be three months.