National Bank MD lauds Treasury for move on Shariah compliant bond

National Bank MD lauds Treasury for move on Shariah compliant bond

National Bank of Kenya has lauded a move by the Government of Kenya to tap into Shariah compliant financing instruments following the announcement of plans to launch the first ever sukuk bond in the country.

Managing Director termed the announcement a “historic feat that will further catalyze economy” saying that both the Islamic population and the nascent Islamic finance industry in Kenya would tremendously benefit from the state action.

Many investors from the Islamic faith in the country and around the world have not been able to participate in domestic borrowing efforts by Kenya’s Treasury and in such other bonds such as the Eurobond due to religious restrictions.

“A sizeable portion of Kenya and the world population profess the Islam faith and this move, therefore, further deepens their participation and financial inclusion."

The MD expects a spillover effect to benefit non-muslim institutions and individuals with the interest sharing concept that results to less systemic risks in Shariah compliant financing already growing in popularity.

Government debut into Shariah Compliant financing will further attract development of technical capacity in the country resulting to growth of other instruments of Islamic finance.

The sukuk market has witnessed a debut issuance from governments that are not part of the Organization for Islamic Cooperation (OIC). This includes the United Kingdom, HongKong, Luxembourg and South Africa. Kenya could likely be the second non-OIC country in Africa to make a debut in the Sukuk bonds market.

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