By Jackson Okoth.
The National Treasury is seeking to allow all Co-operative societies to issue Shariah-compliant products, opening up yet another frontline where competition between these societies will be intense.
On the list of Saccos that are already Sharia-compliant are Crescent Takaful Sacco Society Limited andTaqwa Sacco Society Limited.
Takaful Sacco offers mobile payments, international remittances, chequing services, diaspora services and cash handling services.
Taqwa Sacco Society is based on the Islamic faith-that of not charging any interest on its loan products. It is already been licensed to take deposits and offer banking services. With over Sh400 million in deposits, Taqwa has already opened its FOSA wing that will offer quasi-banking services to members.
“Islamic financing arrangement is becoming a major source of funding development expenditures worldwide. This financial arrangement is getting integrated within the global financial system and has the potential to boost prosperity and raise the standard of living of our people.
Kenya intends to maximize its comparative advantage and position itself as a regional hub for Islamic finance products, in order to attract foreign direct investment. I, will therefore, propose legislative amendments to the Capital Markets Act, the Cooperatives Societies Act and Sacco Societies Act to facilitate for shariah compliant finance products,” said Henry Rotich, Cabinet Secretary for The National Treasury.
He made these remarks in a statement delivered to the National Assembly On 30th March, 2017 when highlighting The Budget Policy and Revenue Raising Measures For Fiscal Year 2017/18.
Shariah-Compliant Saccos are a coalescing platform and a preferred natural conduit for financial services to members of the Muslim faith.
Unfortunately, conventional finance denominated on interest-basis is not acceptable to the Muslims. These Shariah Saccos are targeting the Muslim Community that requires ethical and Shariah-Compliant finance consistent with their faith. These financial products are also expected to appeal to Christians and people from other faiths.
Figures indicate that Taqwa Sacco’s loan book was worth Sh Sh372 million as at the last year. The Sacco, which has been in existence for close to 20 years, will now be offering FOSA services in addition to BOSA.